eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
Michael Dell certainly has always thought big, but who knew he eventually would be the one to put together the single largest tech acquisition in the history of the world?
Dell announced on Oct. 12 that it would buy the vast EMC-VMware-RSA Security kingdom for $67 billion and change. eWEEK discussed this possibility four days ago in this story. The deal is expected to close next spring.
Note that this transaction wasn’t consummated by guys named Ellison, Nadella, Chambers, Zuckerberg or Page or anybody from IBM, HP or Samsung, which comprises 25 percent of the gross national product of South Korea. No Japanese company could have put this together. And Mr. Dell did it with a trimmed-down, privately owned company not even based in Silicon Valley.
Dell Becomes No. 1 All-Around IT Provider
Some thoughts on the deal:
–Michael Dell has always wanted his company to be the No. 1 one-stop shop for enterprise technology buyers. Now he’s got it. With this acquisition, Dell hereby becomes the world’s largest and most complete vendor for IT goods and services in the world. HP? Nah. IBM? Hardly. Oracle? Nope. Cisco Systems? Nada. Samsung? Um, no. Nobody else can touch it.
–Dell immediately becomes the No. 1 provider in the world in storage hardware and software (by all major research analysts), with EMC’s vast installed base, and virtualization software and services, with VMware. It’s No. 3, according to industry researcher IDC, in building and selling laptop, desktop and tablet PCs, ranking behind only Lenovo and HP.
–By the way, Dell will save a lot of future money — millions of dollars — on VMware licensing, since it is one of that company’s biggest customers. Unless it decides to pay itself all that money, of course.
–With the deal, Dell now sells all aspects of enterprise tech: end point devices (laptops, desktop PCs, tablets; Wyse virtual desktop terminals); servers, storage, printing and imaging systems; networking (yes, Dell makes switches, though on a smaller scale than Cisco, HP and others), cloud and managed services; data center virtualization software; database tools and services; new-gen cloud-building architecture; security, content management, integration software and services — the list is a long one.
Potential for the Deal is Great, but Stuff Could Happen
Plenty of people had lots to say Oct. 12 about the potential impact of this deal: how it affects the market, who won, who lost, and so on. My take? The potential is great, but we simply do not know. We never know how a deal, big or small, is really going to work out until things settle down, people come and go, and the new company gets into its new rhythms and routines.
The fact is that Dell Inc. will soon become the world’s most formidable all-around tech company — public or private. Whether the new ship turns out to be too large to steer into trends remains to be seen. Dell has a lot of smart people like Michael Dell working for it; they very likely have seen some of the bad mergers of the past and will try fervently to avoid those issues before they become major problems.
An important point: Dell Software, which was Quest Software until Dell acquired it in 2012, stands to become the de facto manager of an impressive set of products and services, to include Pivotal, RSA Security, VMware, Documentum, and a list of smaller divisions. Software eventually will be Dell’s main driver going forward — especially in the coming IoT age.
What Key Industry People Are Saying About Dell-EMC Merger
Here is what a selection of respected industry people told eWEEK about their takes on the deal.
—Steve Herrod, General Partner of venture capital firm General Catalyst and former CTO of VMware:
“(The deal brings) fairly complimentary product offerings with some interesting synergies: Nicera with Dell Networking products; EMC Storage+Equalogic and Compellent; VCE with Dell’s network and storage offerings; RSA with SecureWorks,” Herrod said.
“On industry changes: Biggest enterprise companies are going for a Goldilocks approach to finding the right mix of heft and autonomy. We’re seeing this with HP and Symantec splitting up and with Dell bringing in more units, many of which will be fairly autonomous. This is similar to Google’s move to create the Alphabet holding company. Lots of pieces, many of which may be sold or go public on their own – VMware, but also Pivotal, SecureWorks, and RSA.
“Prognosis: Massive integrations take a lot of work and can be very distracting. You should assume HP and IBM go to town on the customer base hoping to exploit this. As we juggle all of these offerings, the real threat is from Amazon, and I’ve not yet seen big enough thinking and moves from this converged vendor to make a dent in their offerings,” Herrod said.
—Rob Enderle, Principal at The Enderle Group:
“If this goes through, HP is totally hosed and so screwed. Dell would appear as a far more complete vendor than HP and, with HP’s crippling layoffs, its customers will quickly be looking for enterprise-class alternatives. With EMC, Dell could aggressively go after that business, hitting HP before the firm can stabilize and protect its client base.
“EMC has a number of critical needs that Dell addresses, and Dell has a number of strategic goals that EMC can massively accelerate. However, if the deal goes through, the real loser in all of this is likely HP because just as customers are looking for alternatives, Dell should naturally emerge as the ideal alternative for them,” Enderle said.
—Andres Rodriguez, CEO of cloud storage provider Nasuni:
“There are clearly a lot of synergies with this deal, but both EMC and Dell are, at heart, traditional IT infrastructure companies. It won’t help EMC with its greatest long-term weakness: the lack of a strong cloud storage product. With file data growth at about 40 percent annually, enterprise IT can’t just keep buying and installing more boxes,” Rodriguez said.
“There’s also going to be a lot of concern over how this deal affects the channel. EMC depends on partners to sell its mid-range gear. Will those partners be so eager to sell EMC knowing now that they would be bringing Dell into their accounts? Many of the largest VARs and resellers see Dell as their biggest competitor, after all.
“Nevertheless, this deal will make Dell-EMC the unquestioned leader for data center infrastructure, as it has been traditionally architected. However, the enterprise data center is changing fast, and this combination does not at all address both companies’ weakness vis-à-vis the cloud. Addressing their cloud strategy has to be their No. 1 concern once the merger is complete,” Rodriguez said.
—Craig Stice, Computer and Server Electronics Analyst for IHS, Inc.:
“IHS believes that together as one entity, Dell with EMC will have one of the most complete and unified portfolios, which should provide them additional reach into larger business opportunities they may have not had access to as individual companies. Allowing them to better compete against the likes of IBM, HP, and Cisco in the growing trend of unified IT solutions.
“On paper, IHS sees the deal appears to be the best path for both companies. Financial success, of course, is still a question mark.”
—Jacob Cherian, VP of Product Management and Product Strategy at Reduxio Systems, spent 14 years at Dell:
“This merger … is not going to be easy. Dell has failed to invest to build a strong offering for the flash space and build solutions for the burgeoning unstructured storage space. A merger with EMC is going to give them products in this space, but at the same time there is significant overlap in the product lines (and) Compellent, EqualLogic, Nutanix, FluidFS all could see the end of the road. This is not going to be good for either company, customers. “It is going to be clash of cultures; Dell has excelled at simplicity of the product line, with very little in R&D and marketing leveraging from partners. EMC brings a very complex product line with multiple overlapping products and strong marketing and R&D. Customers will pay for the ensuing confusion as product lines and cultures clash,” Cherian said.
—Charles King, Principal at Pund-IT:
“For Dell, the purchase constitutes both a milestone in the company’s remarkable journey since founder Michael Dell returned as CEO in 2007, and an ignition point for its next phase. For EMC, the deal stands as the best chance to preserve and grow the unique organization that has evolved under the leadership of CEO Joe Tucci, and will also allow the company to leave behind the second guessing and obsession with quarterly earnings that is increasingly common in the financial industry and among institutional shareholders,” King said.
“The $67B size of the Dell/EMC deal mirrors some of the complexities the two companies face, but the fact that they have worked together closely in the past and share many mutual partners should help to mitigate some challenges.”