Menu
As a private company, Dell-EMC will enjoy a freedom HP can only dream of

As a private company, Dell-EMC will enjoy a freedom HP can only dream of

Much of the deal's value pivots on Dell's ability to leverage EMC's sales force

Dell's $US67 billion acquisition of EMC will give it access to a sales force notorious for its ability to "sell ice to eskimos," while EMC will gain a new foothold among mid-market customers. As a private entity, the combined result will face a freedom from market pressures that competitors such as HP can only dream of.

Those are just some of the benefits that could follow from the deal announced early on Monday.

"This industry is undergoing a fundamental transformation," said Crawford del Prete, an executive vice president with IDC. "You can't navigate it with short-term business decisions."

Trends such as digital transformation, the software-defined data center, the hybrid cloud, converged infrastructure, and mobile and security were among the those cited by Dell and EMC as particularly significant market forces.

Essentially, the acquisition means that "we're going to go into a tunnel on one side as two different companies, and we'll come out at the other end as a very different company," del Prete said.

The combination of Dell and EMC will create the world’s largest privately controlled, integrated technology company, the companies said. The structure of the deal, meanwhile, will "enable the business to make long-term investments without the pressure of quarterly results," said Egon Durban, a managing partner with investor Silver Lake, in a conference call Monday morning.

Dell has already enjoyed some of that freedom since it went private roughly two years ago, including the ability to incubate businesses such as Boomi and SecureWorks, said Dell founder and CEO Michael Dell.

"What we've seen over the last three to five years is that even companies that are continuously, significantly profitable are still getting punished by shareholders," said Charles King, principal analyst with Pund-IT.

In Dell's case, the result was to go private. Now, it's EMC's turn.

"The company is either No. 1 or No. 2 in virtually all the major markets it plays in, and it's consistently profitable, yet its shares have remained in the doldrums," King said.

Much of the deal's value pivots on Dell's ability to leverage EMC's sales force, which is notorious for its aggressiveness and ability to "sell ice to eskimos," del Prete said. "If Dell can leverage that and move ahead with products like Boomi and SecureWorks, that's huge incremental growth."

In the meantime, it's "open season on EMC salespeople," he added. Now that the deal has been announced, Oracle co-CEO Mark Hurd and HP CEO Meg Whitman are likely "calling as many EMC salespeople as they can."

Assuming the deal goes forward, EMC's federated structure could face some tests over the next 18 to 24 months.

VMware will remain a pubic and independent company, but included in EMC are various other pieces as well, including RSA Security, Documentum and Pivotal. Following the acquisition, those pieces may have to "speak" with a more unified voice.

"All of these are different squares of the mosaic," IDC's del Prete said. "I think that on the other side of this tunnel, there's going to be a lot less 'grout' between the tiles."

Executives didn't rule out the possibility of layoffs during the Monday conference call, but they did say no major management changes were expected. Dell has actually added 2,000 new salespeople over the past six months, Michael Dell noted.

Though it's similar in some ways to HP's acquisition of Compaq back in 2002, there's much less overlap between the two companies, King said.

Still, "over the past decade, EMC has built up one of the strongest executive benches in the tech industry, and a lot of those men and women are probably asking themselves what place they'll have in this combined business," he added. "It will be critical for both companies to retain the talent they've spent so much time and money building up."

From a customer perspective, the acquisition could offer access to a broader portfolio of products and services. EMC customers, in particular, could see some attractive deals available to them because of that broader reach, King suggested.

Competitively, HP could suffer the consequences.

"I think you could make the argument that with HP splitting into two companies, this gives Dell/EMC an opportunity to go after those customers," King said. "In many ways, this couldn't have come at a worse time for HP."

The real key to the deal lies in corporate data centers, which are "the digital heart" of most companies but are shrinking in favor of cloud computing services, noted Forrester analyst Glenn O'Donnell.

"Many will highlight how this deal gets Dell very little in the cloud arena," O'Donnell said. "That's true, but companies will continue to buy an enormous amount of EMC products in the future. A shrinking market is not good for public companies, but for a private firm like Dell, that cash flow is delightful."


Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags managementmarketingDellPCNetworkingComponentsemc

Featured

Slideshows

Consegna comes to town with AWS cloud offerings launch in Auckland

Consegna comes to town with AWS cloud offerings launch in Auckland

Emerging start-up Consegna has officially launched its cloud offerings in the New Zealand market, through a kick-off event held at Seafarers Building in Auckland.​ Founded in June 2016, the Auckland-based business is backed by AWS and supported by a global team of cloud specialists, leveraging global managed services partnerships with Rackspace locally.

Consegna comes to town with AWS cloud offerings launch in Auckland
Veritas honours top performing trans-Tasman partners

Veritas honours top performing trans-Tasman partners

Veritas honoured its top performing partners across the channel in Australia and New Zealand, recognising innovation and excellence on both sides of the Tasman. Revealed under the Vivid lights in Sydney, Intalock claimed the coveted Partner of the Year 2017 (Pacific) award, with Data#3 acknowledged for 12 months of strong growth across the market. Meanwhile, Datacom took home the New Zealand honours, with Global Storage and Insentra winning service provider and consulting awards respectively. Dicker Data was recognised as the standout distributor of the year, while Hitachi Data Systems claimed the alliance partner award. Photos by Bob Seary.

Veritas honours top performing trans-Tasman partners
An Evening With Eugene Kaspersky for Kiwi partners in Auckland

An Evening With Eugene Kaspersky for Kiwi partners in Auckland

​New Zealand partners came together for An Evening With Eugene Kaspersky in Auckland, an invitation only event as part of Kaspersky Lab Partner Engage. Following an evening of insights and executive networking with the founder of Kaspersky Lab, Eugene Kaspersky, Kiwi partners got up close and personal with Eugene in an unprecedented​ panel discussion. Facilitated by Reseller News, this panel explored channel relationships, successful business strategies, and the latest ground breaking technologies to impact the security market. Photos by Maria Stefina.

An Evening With Eugene Kaspersky for Kiwi partners in Auckland
Show Comments