By undertaking the leveraged buyout with Silver Lake and a loan from Microsoft Corp., among other financiers, chairman, CEO and founder Michael Dell eliminates the scrutiny of the public markets as the company continues its transition.

The shift could bring its own complications, however, as Dell pushes up against large competitors such as IBM Corp., Oracle Corp. and Hewlett-Packard Co.

With the management buyout comes the question of whether the PC manufacturer could sell off parts of the business, and whether other public companies will follow its example.

"Dell has had a very interesting strategy over the last few years," said Matthew Hoffman of Cowen and Co.

"Basically, that was to take a robust and successful enterprise sales force and bring new product sets into that channel."

To offset declines in personal computers, the company developed products but also acquired businesses, such as systems management company Kace Networks Inc., network security provider Sonicwall Inc. and information technology services company Perot Systems Corp.

The company has been stingy with research and development, however. Its outlays are "spartan" compared to what a company like Apple Inc. puts into product development, Hoffman said. The lack of new products has increased the company's exposure to the PC industry's declines.

"They construct and sell products well," Hoffman said. "What they don't do is spend a lot of money on primary R&D to create breakout products."

Dell has done "yeoman's work" to support the stock through buybacks and increased dividends, Hoffman said.

While the company has maintained its margins, revenues have declined with the PC business.

It is not the best formula for a public company. Structural changes will be easier with private ownership.

"You're going to compress the top line by selling off businesses and refocusing capital," Hoffman said. "That's really what they will end up doing here over the next two to three years."

Dell could sell its PC and peripherals businesses, the analyst suggested.

That would be akin to when IBM sold its PC business to Lenovo in 2005 for $1.75 billion. Of course, IBM was already a strong IT services company at the time.

"The implication is that there are going to be radical changes, otherwise they would not be making this move," said Ovum plc analyst Carter Lusher.

Lusher described a "wrenching transition" for Dell, as it moves from a "commodity hardware" provider in the PC market to an enterprise services and infrastructure company.

Going private will help, he said, but it also introduces its own issues.

Dell's bet on IT services may not bring it the material gains it is envisioning.

Corporations and other large buyers of those services could sit on the sidelines and wait for more clarity on Dell's strategies.

And that would give sales people from IBM and Oracle material for their sales pitches for rival products, Lusher suggested.

Hewlett Packard already predicted "a very tough road ahead" for Dell and its customers in a Tuesday statement. HP, of course, has its own strategic issues following the troubled buyout of Autonomy.

Corporate clients with long contracts conduct due diligence on IT providers, which introduces another issue.

"One of the interesting problems Dell is going to have is dealing with these multimillion-dollar contracts that last multiple years," Lusher added. Publicly traded rivals may present more clarity on their financial outlook.

JPMorgan said it believes an LBO of Dell's size may renew speculation that large software vendors with significant cash flow could be potential takeover targets.

Candidates would include CA Inc., with a $11.3 billion market capitalization, and Symantec Corp., with a $15.5 billion equity value.

In addition, the report said BMC Software Inc., which has a $6.7 billion market cap, could draw attention because of its cash flow characteristics and modest growth.

To support the LBO, Microsoft is providing a $2 billion loan.

The JPMorgan report suggested that extending such loan, instead of making an equity investment, would be easier for Microsoft's PC-manufacturing partners to accept, as it minimizes the perception that Dell would get preferential treatment.

Microsoft said it is providing the loan in the interest of ensuring "the long-term success of the entire PC ecosystem."

The Redmond, Wash.-based computer giant has provided this kind of capital to other companies, such as Barnes & Noble Inc., Nokia Corp. and, most famously, Apple Inc., which was known as Apple Computer at the time of the 1997 funding.

Dell has a 45-day period to seek other buyers. If one comes forward within the window, there will be a $180 million break-up fee. Should a rival surface after the go-shop, the termination penalty jumps to $450 million.

Of course, the LBO talks have been publicly aired in recent weeks so any interested suitor would likely have already contemplated a move.

The Dell bidding group has the obvious benefit of Michael Dell's shares and his commitment.

There is still the hard work of closing the LBO and making good on Dell's ambitions in the enterprise market.

"I am enthusiastic about this strategy," Hoffman said. "I was not enthusiastic about the public company stock."

If Dell and his backers succeed, in a number of years, the logical conclusion of the Dell LBO story could be the Dell IPO.