Dell Acquires EMC: Godzilla Marries King Kong?
My first urge was to blog about Dell acquiring EMC the same day it was announced. But I decided to give it some time and do what my blog site says - contemplate.
The world of IT is drastically changing in obvious and subtle ways. Interestingly, Dell is blazing new trails making stunning and unpredictable moves. Dell should change its name to "Balls". First they went private and now they buy EMC. Pretty ballsy.
The Good Stuff
1. EMC has a lot of really smart people.
2. EMC has the biggest, baddest and arguably best Enterprise IT sales force in the world.
3. Dell is the king of supply chain, operational efficiency and managing costs. Additionally, the buying power of the combined companies is pretty staggering.
4. The combination of Dell and EMC has created a mega-private company enabling them to work with a bit more autonomy than a publicly held one.
5. EMC is one of the best in performing high tech M&A - if they retain this capability, it will play a major role in their success going forward.
6. Michael Dell will be the CEO. He has proven that he is bold, smart and ambitious. And let's face it - he is a bit of a celebrity in the high tech world and that does make a difference internally (employees) and externally (customers, partners, investment community and media).
7. Dell and EMC are now a total solutions provider and just did a leapfrog over HP and IBM.
The Bad Stuff
1. Dell and EMC have very different cultures. We have seen the damage that culture clashes create (HP+Compaq and Sun+StorageTek). I think Dell can avoid this but they shouldn't ignore it.
2. EMC and VMware are still leaders in the IT world but they are not as strong as they once were and are arguably trending downwards. If you don't agree that EMC and VMware are becoming less relevant, I offer this acquisition as proof - it is the only reason why a deal like this could even happen. Dell, EMC and VMware are all valuable to IT but they are not strategic and they never will be if they just focus on plumbing/infrastructure.
3. As I said - the world is changing. Cloud is here and is a real threat to the status quo. More and more applications are cloud native. Certainly, the complete replacement of on-premises IT infrastructure is far from imminent but it is on the decline and is far less important than it once was.
4. IT departments are transforming from being break/fix support organizations into service providers that are partners with the business. Additionally, there is a digital evolution in progress within the Enterprise. Dell, EMC and VMware are not really a part of this strategic transformation of IT that is already underway.
Dell just became a powerhouse of traditional IT solutions. But traditional IT is on the wane. So while they do all of the necessary heavy-lifting - (streamline the company, lower costs, retain their customers and employees, pay down debt, increase revenue, etc.) - they must waste no time and re-invent themselves from a leader in traditional IT - (which they just became) - and tranform into a leader of the new world of IT.
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