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Dell is partnering with Altiris software

Computer-maker wants to beef up its software side

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AUSTIN, Texas — Dell Inc. is getting in touch with its software side.

The company will announce a partnership today that represents one of its largest software investments in years. It's part of Dell's effort to push further into applications that support the hardware it sells to corporate customers.

"We are an enterprise player, and that means providing solutions beyond hardware," said Subo Guha, director of enterprise software marketing. "Dell 2.0 is about the customer experience, and that means more investment in software and services."

Dell will work with Lindon-based Altiris Inc., which develops software to help manage data centers and other large technology networks. Over the next year, the companies hope to develop a single platform that corporate technology managers can use to coordinate the hardware and software in those data centers and across those networks.

As part of the five-year deal, Dell has received warrants to purchase almost 1.5 million shares of the software company at $23.13 apiece. The deal gives Dell the option to acquire a 5 percent stake in Altiris for about $33.8 million.

The joint venture's systems will be based on a new standard that Dell, Microsoft Corp., Oracle Corp. and others are announcing today. The companies have joined to develop a single industrywide approach to managing complex computer networks.

"It's a very aggressive industry stance to simplify systems management," Guha said.

Data centers and large technology networks have grown larger and more complex. It's to a point where managing the systems has grown increasingly costly, at times rivaling the expense of the hardware itself. Technology managers have sought ways to simplify how they oversee their systems and reduce those expenses.

Better control of the networks is the key to keeping them up and running at a higher rate, said Stephen Elliot, research manager at IDC, a technology analysis firm. And management software also makes it significantly easier to update systems when new hardware and applications come out.

Because of the need to better manage systems, Elliot said, platforms such as the one Dell and Altiris hope to develop have become an increasingly necessary "checklist item" to supplement hardware sales.

IBM Corp. and Hewlett-Packard Co. each have built large software organizations to develop systems-management tools. IBM has Tivoli Systems, an Austin startup it acquired in 1996. H-P earlier this year acquired Mercury Interactive Corp. in a $4.5 billion deal.

Dell is "feeling the pinch," Elliot said. "This is an area that most of the competition has been investing in, whether through organic development or acquisition. Dell has been pretty quiet."

Although Dell already offers its OpenManage platform to oversee data centers, it appears to be increasing its software investment side. Earlier this month, the company said it had acquired a small software firm in the United Kingdom, and Chairman Michael Dell has said his usually acquisition-averse company would consider more deals.

The company recently said it would hire about 500 engineers in Austin, most of whom will help design hardware products. But included among them are a contingent of software developers, said Dell's Guha.

"I've been with Dell nine years, and I'd say the spending we've done, we're doing this year and I'm seeing going forward are a lot larger than in the past," he said.