Dell-EMC Mega-Merger Extends Pace of Enterprise IT Consolidation
NEWS ANALYSIS: Dell's proposed $67 billion buyout of EMC is only the latest in a long line of mega-mergers that will continue to winnow out the biggest players in the enterprise IT field.When trying to understand the implications of a major event like Dell's $67 billion buyout of EMC, sometimes it helps to look to the past before looking forward. First, go back to IBM's $3.52 billion acquisition of Lotus in 1995. At the time that was the most money ever paid for a software company. That seemed to set off a wave of tech mergers and acquisitions with some notable examples including Compaq's buyout of legacy minicomputer maker Digital Equipment in 1998 and HP's acquisition in turn of Compaq in 2001. The pace of computer industry mergers have continued steadily to this day with the cost rising exponentially to match the market mega-billion dollar market capitalization of the buyout targets. In fact, growth by acquisition has become a primary strategy among the old guard tech firms in the past decade. Oracle made four major multi-billion-dollar acquisitions between 2005 and 2009—PeopleSoft, Siebel, BEA and Sun—and lists 100 other acquisitions on its Website. EMC itself has 75 acquisitions to its credit. Check out this list of acquisitions made by Cisco the past 20 years.
We have seen this before and we have not seen the end of technology consolidation, and this may only be the "end of the beginning," as Winston Churchill once said. Flash back to May 2014, when Cisco CEO John Chambers, speaking at the company's annual IT summit said, "You're going to see a brutal, brutal consolidation of the IT industry," talking of a "musical chairs-like movement" over the next few years and predicting that many of the current players in high tech won't exist 10 years from now.