The $67 Billion Dell and EMC Deal Closed Today

Article Written by David Marshall



Nearly a year after it was first announced, Dell Inc. today closed its $67 billion deal to buy EMC Corporation; and with it, taking on a new name -- Dell Technologies.  With this transaction, Dell has closed the largest technology merger in history and has become the world's largest privately held technology company with $74 billion in revenues.

Dell Technologies will initially employ ~140,000 workers, making it the largest privately controlled technology company by the numbers according to Tom Sweet, Dell Technologies' CFO.

The new company also underscores a shift toward IT industry consolidation as leading players in servers like Dell and storage leaders like EMC search for synergies in order to meet enterprise demand for hybrid cloud and cloud-native offerings.

In a press conference conducted earlier today, a question was raised as to whether or not the acquisition would siphon money, manpower, and influence away from the Massachusetts' tech sector, and move everything to Round Rock where Dell is located.

But executives on the call set out to smooth over those fears, announcing the newly combined company would have dual headquarters.  Dell's headquarters would remain at its longtime home just outside of Austin, Texas.  While its enterprise computing division would be run from EMC's hometown of Hopkinton, headed by former EMC executive David Goulden.
 
Goulden said Dell Technologies plans to keep steady or grow its number of employees in Massachusetts. 

Back in January, both VMware and EMC announced layoffs ahead of the deal being finalized in separate actions.  But further layoffs are still possible (and expected by many on the outside looking in) as the two companies are set to combine their operations, although Goulden reiterated on the call that overlap between the two companies was actually quite small.

"We have one of everything, not two of everything," Goulden said.  "It's very complimentary."

The new company will continue to sell PCs, servers, storage, networking and software products.  But with the acquisition, Dell not only acquired EMC but also that firm's federation of wholly and partially owned subsidiaries which include cyber security firm RSA Security, software development and services company Pivotal, and enterprise-class cloud software company Virtustream.  And of course, Dell Technologies assumes EMC's nearly 80 percent ownership of the publicly traded virtualization software giant, VMware.

The VMware piece of the equation has caused alarm for many in the industry.  The question as to whether or not VMware would continue to operate as an independent entity or be dominated and controlled by Dell has come up a fair amount over the last 11 months during this process.  However, executives across all companies have continuously stated that VMware would continue to operate independently.  That was reiterated again by Michael Dell at VMworld as he and VMware CEO Pat Gelsinger told audience members during the keynote presentation, the open ecosystem of VMware is absolutely critical to its success, so they are going to continue and encourage that, adding, things won’t change. 

The proof, as they say, will be in the pudding.  It will be interesting to watch as Dell and VMware attempt to navigate the waters without disturbing or agitating partners like Microsoft, HP and IBM.

Other changes as the result of the acquisition -- Michael S. Dell, who remains the chairman and CEO of the newly minted Dell Technologies, has also now been elected to the VMware board of directors as chairman of the board.  Joining Dell on the board is Egon Durban, managing director of private equity firm Silver Lake.  Both of these appointments were triggered by Dell Technologies' completion of the acquisition of EMC Corporation.  In order to make room on the board for the two new additions, two resignations followed with Joseph M. Tucci, VMware's chairman of the board of directors since 2007, and John R. Egan who served as a director on the VMware board of directors since 2007, both leaving.

Overall, the newly combined company seems to be focused on the private and hybrid cloud, and at least for now, keeping as much compute within the data centers owned and operated by end-users in an effort to head off public cloud juggernauts Amazon Web Services and Microsoft Azure.

Dell Technologies and its rivals are betting that converged hybrid cloud platforms running cloud-native applications represent the future of enterprise IT.  And to that point, Goulden said the new unit would likely extend partnerships with public cloud providers as it launches the combined cloud IT infrastructure unit.

"We are at the dawn of the next industrial revolution.  Our world is becoming more intelligent and more connected by the minute, and ultimately will become intertwined with a vast Internet of Things, paving the way for our customers to do incredible things," said Michael Dell.  "This is why we created Dell Technologies.  We have the products, services, talent and global scale to be a catalyst for change and guide customers, large and small, on their digital journey."

The acquisition deal has come to a close.  Next comes the hard part (if you can imagine) of integrating these two behemoth companies into a cohesive operation.  And while the consensus is that things will work themselves out eventually, combining two companies the size of Dell and EMC is going to take a herculean effort and a substantial amount of time to pull off. 

Ready or not, here it comes.

##

About the Author

David Marshall is an industry recognized virtualization and cloud computing expert, a seven time recipient of the VMware vExpert distinction, and has been heavily involved in the industry for the past 16 years.  To help solve industry challenges, he co-founded and helped start several successful virtualization software companies such as ProTier, Surgient, Hyper9 and Vertiscale. He also spent a few years transforming desktop virtualization while at Virtual Bridges.

David is also a co-author of two very popular server virtualization books: "Advanced Server Virtualization: VMware and Microsoft Platforms in the Virtual Data Center" and "VMware ESX Essentials in the Virtual Data Center" and the Technical Editor on Wiley's "Virtualization for Dummies" and "VMware VI3 for Dummies" books.  David also authored countless articles for a number of well known technical magazines, including: InfoWorld, Virtual-Strategy and TechTarget.  In 2004, he founded the oldest independent virtualization and cloud computing news site, VMblog.com, which he still operates today.

Follow David Marshall

Twitter: @vmblog
LinkedIn: https://www.linkedin.com/in/davidmarshall
Blog: http://vmblog.com