Microsoft’s decision to back Dell has some rivals wondering if it is playing favorites.
The software giant described the $2 billion it loaned founder Michael Dell and his group to complete the $24 billion Dell buyout a passive investment aimed at keeping the entire PC industry — the backbone of its profitable Windows-based ecosystem — healthy.
However, sources said that Microsoft, run by CEO Steve Ballmer, is strengthening ties with Dell in part because it has a strained relationship with Hewlett-Packard, another PC giant.
HP, arguably Dell’s biggest US rival, claimed in a bombastic press release yesterday that “Dell has a very tough road ahead…[because] leveraged buyouts tend to leave existing customers and innovation at the curb.”
Just a few days ago, HP announced it would launch a Chromebook based on Google’s rival Android operating system.
HP’s Android endorsement was a blow to Windows.
But their relations started to fray before that in 2010, when HP bought smartphone maker Palm, according to an HP insider.
“We should have knocked on Microsoft’s door” and developed a smartphone together, the insider added, but at the time HP felt it needed to act and was not willing to wait.
HP declined comment while Microsoft did not return calls.
With Microsoft cozying up to Dell, HP might try to forge a strategic partnership with network-equipment maker Cisco even though they presently compete in many of their business lines. Cisco has software that HP needs, the insider said.
In addition, HP CEO Meg Whitman has called Cisco CEO John Chambers a “dear friend.” Chambers supported Whitman in her unsuccessful run for governor of California in 2010.
Dell, for its part, is developing tablet computers, which it considers an important new product line, a source close to the deal said. It also plans to go deeper into servers, storage and networking.