Michael Dell: EMC Deal Will Create Powerful IT Provider

The CEO contrasts the move with HP's decision to split in two, saying successful tech companies need scale and volume.

CEO Dell

AUSTIN, Texas—EMC promises to cast a larger shadow over the Dell World 2015 show here this week.

On a day when Dell made a series of announcements around everything from the data center and big data to security, PCs and the Internet of things (IoT), it was the company's $67 billion bid for EMC and its assorted companies—including VMware, RSA and VCE—that dominated a press conference with CEO Michael Dell and other executives on the first day of the show Oct. 20.

It's a deal that has generated a lot of discussion throughout the industry, not only for its sheer size—it's the largest deal ever by far in the tech market—and the integration challenges it presents, but also because of how it contrasts with what competitors in the market are doing. That is particularly true of Hewlett-Packard, which is opting to split in two as a way to better address the changing business dynamics in the industry driven by such trends as big data, mobility, software-defined infrastructure and the cloud.

However, according to Michael Dell, if a vendor is looking to be the top enterprise IT solutions and services provider, size and scale are important. And EMC will give it that scale, he said, not only in corporate products of today—such as servers, storage, virtualization and PCs—but also in the emerging technologies that are rapidly changing the data center, including big data, converged infrastructure, mobility, cloud and security.

The result of the deal will be "an incredible [company] coupled with more than $80 billion in [combined] revenue," Michael Dell said. "All of it operated as a privately controlled company."

When asked about the contrast with HP—the split will become official Nov. 1, creating Hewlett-Packard Enterprise (which will sell enterprise IT solutions and services) and HP Inc. (PCs and printers)—Michael Dell said it comes down to a question of vision.

"We have a different viewpoint as to how our companies should evolve than HP does," the CEO said, adding that "scale is important. … When you look at the industry, companies that have succeeded in the … data center space were attached to large PC businesses, client businesses, and volume actually matters."

He also was asked about comments by HP CEO Meg Whitman, who told employees that deal will burden Dell with debt and that the effort needed to integrate two such large companies will distract it from serving customers and open up opportunities for her own company.

After a pause, Michael Dell chuckled and said, "I think HP is a great VMware partner. I don't have any other comment."

The proposed deal has had other impacts on the Dell World show. After the deal was announced Oct. 12, there was a noticeable increase in interest in attending the event among Boston-area media, according to organizers. EMC represents the last of the major Massachusetts-based tech companies after the demise of such names as Wang and Digital Equipment Corp., and state officials have worried that the sale could mean lost jobs.

However, Michael Dell and EMC CEO Joe Tucci said last week that the plan is to move much of Dell's enterprise systems business up to EMC's facilities in Hopkinton, Mass., just west of Boston.

Since returning as CEO in 2007, Michael Dell has spent more than $15 billion to buy more than 30 companies in an effort to transform the vendor from a commodity PC and server maker into a company that can rival HP and IBM in enterprise technology and services. Bringing EMC and its federated companies into the fold could do just that, though not without challenges.

Bob O'Donnell, principal analyst with TECHnalysis Research, said it will be interesting to see how a combined Dell-EMC will impact the industry.

"I was thinking about the size of the organization and the breadth that they will have," O'Donnell told eWEEK. "All of a sudden they're a company that sets trends rather than reacts to trends."

For example, Dell’s approach to the cloud will influence the cloud plans of other vendors, he said.

"There are more questions than answers," O'Donnell said.