Microsoft defends frayed PC ecosystem with $2 billion Dell loan

Microsoft defends frayed PC ecosystem with $2 billion Dell loan


By Bill Rigby and Poornima Gupta

SEATTLE/SAN FRANCISCO | Tue Feb 5, 2013 10:49pm EST

(Reuters) - Microsoft Corp is playing defense with a $2 billion loan to help Dell Inc's founder buy back the world's No.3 PC maker as it seeks to shore up support for Windows and beat back the march of Google Inc's Android.

The investment in the landmark $24 billion buyout led by Michael Dell marks the latest step in Microsoft's plan to gain more influence over the hardware supply chain - a departure from the decades-old, software-centric philosophy that helped it dominate the computing world but is now increasingly under threat.

It is far from clear, however, if this strategy will be successful, while the world's largest software maker risks upsetting other computer producers.

"It doesn't mean it's a bad move, but it's definitely defensive. Microsoft is realizing it must be much more engaged in the hardware business than it used to be, it needs to be making bets and forming relationships," said Andrew Bartels, an analyst at Forrester Research.

The company that built its fortune on making high-priced software to go in other companies' computers is inching closer to Apple Inc's belief that software and hardware must be closely integrated for the sake of the user experience.