Dell, EMC Mega-Merger Extends Pace of Enterprise IT Consolidation

By Scot Petersen  |  Posted 2015-10-14 Print this article Print
Mega Merger Trend

Intel, Cisco, IBM, Microsoft and Oracle, and now Dell, we presume, make up the center of gravity in the tech business. Everybody will fall into it eventually.

HP will remain at the center of the M&A story. HP was mentioned as a player in potential deals with Dell and EMC in the past. Its looming split into HP Inc. and Hewlett-Packard Enterprise took them out of the running for EMC this time, but after the split takes place Nov. 1, one or both will instantly become targets for acquisition or they will go looking for acquisition targets.

As has happened in other major industries, the number of major tech players will continue to shrink. There used to be more than a thousand automobile manufacturers in the U.S. How many are there now? We may see a day when there's only the "Big Three or Four" enterprise IT companies left standing to dominate the IT market.

The irony of the current environment is that technology is better, stronger, faster, and can do more things than ever before. So why is tech spending declining? We can attribute much of the "blame" to Moore's Law. The next generation of IT technology has always been twice as fast or has had twice the capacity for the same amount of money. That model is showing some cracks, which presents its own set of problems, but it has gotten us to where we are today.

Users, both consumer and corporate, have been the major beneficiaries of Moore's Law, in terms of cost savings and increased productivity, but that too may be ending. Somehow consumer and enterprise customers will have to learn to extract more value out of technology without the benefit of falling prices and increased performance.

We are beginning to see some promise from deep learning, natural language processing and other forms of artificial intelligence, but it's not clear when or where the real breakthroughs will happen and if they will be able to counter the current downward spiral. Buckle up.

Scot Petersen is a technology analyst at Ziff Brothers Investments, a private investment firm. Prior to joining Ziff Brothers, Scot was the editorial director, Business Applications & Architecture, at TechTarget. Before that, he was the director, Editorial Operations, at Ziff Davis Enterprise. While at Ziff Davis Media, he was a writer and editor at eWEEK. No investment advice is offered in his blog. All duties are disclaimed. Scot works for a private investment firm, which may at any time invest in companies whose products are discussed in this blog, and no disclosure of securities transactions will be made.


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