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Japanese Giant NTT climbs further in the food chain

Carrier NTT is adding another bead to its necklace. NTT Data has announced the acquisition of Dell Services, the global IT services provider. The deal reflects NTT DATA’s continued focus on expanding its brand and leadership position globally. Market analysts say that NTT will be paying over US$3 billion.

Rumor has it that Dell needed cash to fund its US$67 billion EMC take-over and therefore sold its services business. It also appears that Dell wanted to let its services go in order to avoid channel conflicts, as the EMC portfolio is indirectly delivered via partners who would not be amused to see competition from Dell Services.

NTT and its various subsidiaries have showed a strong appetite for acquisitions, with particular focus on data center providers. They’ve gobbled up data center companies across the globe, like US-based RagingWire, India’s NetMagic, UK’s Gyron, Germany’s E-shelter, and Indonesia’s PT Cyber CSF. They also bought security companies and IT Services providers, among them, Dimension Data being the most prominent name.

NTT succeeds in a strategy that most other carriers tried but failed at: the creation of a global business that integrates networking, datacenter services, IT outsourcing and Managed Services. One thing is certain: carrier-neutrality is far away. NTT builds a huge vendor lock-in honeypot. The customer that goes in, attracted by the completeness of the offering, will soon discover that his flexibility and freedom of choice are gone. A carrier-neutral strategy that supports the business requirements of the customer has proved to offer much more value than the carrier supply-driven approach of NTT and others.

Anyway, the Dell deal will probably trigger a new phase of Mergers & Acquisitions in the IT and cloud business. What will HP and IBM do? And Vodafone or Verizon? What will the future bring for the independency of Atos, Capgemini or CGI?

Would you like to know if this deal has an impact on your connectivity? Contact us at info@custom-connect.com

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