After buying up millions of dollars worth of shares in PC maker Dell, activist investor Carl Icahn has thrown in the towel, announcing he’ll no longer be pursuing his hostile takeover plans. Icahn states that he continues to oppose CEO Michal Dell’s plans to take the firm private, but with his announcement today it looks as though there’s nothing left to stop that from happening.

In a letter addressed to shareholders on Monday, Icahn stated that it’s not possible to turn around a series of defeats in his takeover battle, which include voting rule changes that made it easier for the CEO and his partners at Silver Lake to secure victory at a shareholder vote due on Thursday.

For Icahn, the final straw came last month when Leo E. Strine Jr., chancellor of Delaware’s Court of Chancery, said that the rule changes were legal under Delaware’s corporate laws.

Not that Icahn is at all pleased about it. In his letter, he insisted that he still plans to vote against Dell’s privatization deal and would seek an appraisal of his holdings in the company. He also defended his actions in recent months, stating that his battle had actually benefited the company’s shareholders:

“I realize that some stockholders will be disappointed that we do not fight on,” wrote Icahn.

“However, over the last decade, mainly through ‘activism’ we have enhanced stockholder value in many companies by billions of dollars.”

Icahn also took the opportunity to have a dig at his rivals with the following acid comments:

“What’s the difference between Dell and a dictatorship?’ The answer: Most functioning dictatorships only need to postpone the vote once to win.”

“The Dell board, like so many boards in this country, reminds me of Clark Gable’s last words in ‘Gone with the Wind,’ they simply ‘don’t give a damn.’”

Strangely, Icahn also offered his congratulations to Mr. Dell for winning the fight, saying that he intends to call him and “wish him good luck”, stating that the company founder may well need it in future.

What’s Next For Dell?

With Icahn now apparently out the way, it seems almost certain that Michael Dell’s initial plan to take the company private will proceed as intended. At the time his plans were first revealed, Michael Dell said that the move was aimed at easing the company’s transition away from being purely a hardware maker to a provider of services for the enterprise – a shift that’s going to be painful as it will likely hurt the company’s earnings, but also an extremely necessary transition given the decline of the PC market in recent years.

By going private, Dell will find it easier to weather the storm as it reinvents itself, away from the prying eyes of investor scrutiny – but that doesn’t mean it’ll be an easy transition. The plan is for Dell to evolve from a consumer-oriented hardware company to an enterprise-ready service provider, a plan that’s been in the offing for the last couple of years at least. As we’ve seen, Dell has made a number of acquisition in recent years as part of its efforts to retool itself as a services provide, most notably buying Perot Systems for $3.9 billion in 2009, Dell’s biggest acquisition at the time.

Dell’s problem is that it still lacks a complete services portfolio, even if it now has strong offerings in consulting, security and BYOD management. Questions have been raised (notably by rival HP) as to whether or not a private Dell will have the resources to continue its aggressive acquisition strategy – something it has to do if its to guarantee a full services portfolio like it needs to. However, Wikibon analyst Stu Miniman dismissed these concerns earlier this year, pointing to the company’s positive cash flow and the fact it won’t have to invest billions in stock buy backs to remain an attractive proposition for investors.

“For the past five years Dell’s been spending about $3 billion a year in stock buyback. Since they’ll no longer be spending cash on these buybacks, they’ll have the cash to invest,” insisted Miniman last February.

Dell will face some tough challenges going forward, but as SiliconANGLE founder John Furrier stated before, its a gutsy move but also a smart move that’s likely to pay off:

“Going private is a dream for management during times of retooling, because you can play with the assets and financials,” stated Furrier. “Not reporting to Wall Street is a big deal during a pivot of this size. As long as it can service their debt, Dell is in a good position in terms of its core assets.”