The Dell-EMC deal. Will it change the tech landscape?


One of the most important deals in the tech business this year is that Dell is purchasing the cloud- and data storage company EMC for about 67 billion dollars, which is around 24 dollars per share for the EMC shareholders. The merger of the two companies will allow Michael Dell to remain CEO and more importantly will allow for the diversification of Dell, which is essential for the company’s long term strategy, because the PC market is not as strong as it used to be, to put it mildly.

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According to Business Insider the same merger could have happened in 2002, but Michael Dell personally stopped the acquisition talks; he was afraid of an acquisition so large right after the burst of the internet bubble, despite EMC being valued at around 16 billion dollars back then. However, at the time Dell’s strategy was focused on manufacturing as many PCs as possible at an extremely high profit margin, utilizing its economies of scale that was practically unmatchable at the time.

EMC may not be as widely known as Dell, but it is actually a very large company with more 70 thousand employees worldwide, providing very popular cloud- and data storage services. The company also owns the RSA digital security software analysis company and the major part of Vmware, which is a software virtualization company. According to leaked information about the details of the merger, Dell has agreed to keep Vmware as an independently operating company.

According to Daniel Ives, who is the Managing Director in the technology, media and telecom research group of the enterprise software company FBR Capital Markets & Co., FBRC, this is just the tip of the iceberg and many acquisitions will follow from large, traditional tech companies. He also mentions some actual examples that could potentially happen in the foreseeable future: 1. Cisco and NetApp, 2. Cisco and FireEye, 3. IBM and Splunk, 4. IBM and Tableau, 5. HP and Fortinet, 6. Microsoft and Salesforce, 7.Oracle and Netsuite.

Do you think that the Dell-EMC deal will have a long lasting effect on the tech industry?  Will it motivate other large, traditional tech companies to engage in large scale M&A deals that will significantly change the tech landscape? And more importantly, is it beneficial for the tech industry? What is your opinion on the matter?

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References

https://www.twst.com/bio/daniel-ives-2

http://hvg.hu/tudomany/20151012_Rekord_megtortent_a_techvilag_eddigi_leg

http://uk.businessinsider.com/dell-emc-deal-2015-10?r=US&IR=T

http://uk.businessinsider.com/dell-acquires-emc-vmware-2015-10?r=US&IR=T

http://www.patentlyapple.com/patently-apple/2015/10/dell-buys-emc-for-67-billion-making-it-the-largest-technology-takeover-in-history.html

http://uk.businessinsider.com/dell-emc-deal-could-spur-more-huge-tech-mergers-2015-10?r=US&IR=T

http://uk.businessinsider.com/michael-dell-blocks-emc-acquisition-plans-in-2002-2015-10?r=US&IR=T

 

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One response to “The Dell-EMC deal. Will it change the tech landscape?”

  1. Martin A. K. says :

    Hi – interesting article!

    In my opinion this is just another ‘corporate’ deal that was based on a corporate strategy with no vision. In other words, this is about increasing revenues, market share but not transforming an industry.

    I find this video supports my point: https://www.youtube.com/watch?v=yeiI8cd5rO4

    What do you think? Will they become more innovative?
    martin

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