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Dell, EMC US$67-B merger creates ‘largest tech franchise’

Dell, EMC US$67-B merger creates ‘largest tech franchise’ 

Rumours about a Dell buyout of EMC began circulating late 2015 and Dell’s acquisition plans were announced October last year. There have been some challenges and regulatory hurdles along the way. But now with the deal signed, the real hard word of integrating the two companies begins.

Dell Technologies aims to be a one-stop-shop for information technology sold to business, according to a joint release from Dell and EMC. Dell Technologies employs about 140,000 people globally and will maintain operations in Hopkinton, Mass., where EMC was located. With $74 billion in revenue, Dell Technologies will be the world’s largest privately controlled tech company.

Michael Dell will lead the combined company as chairman and chief executive officer, and Joe Tucci will continue as chairman and chief executive officer of EMC until the transaction closes.

“We believe this transaction will create a new leader in the most critical areas of the $2 trillion information technology market, including Digital Transformation, Software Defined Data Center, Hybrid Cloud, Converged Infrastructure, Mobile and Security,” Tucci said in a statement. “This new structure will further provide us with the flexibility and agility to focus 100 per cent on you, our customers, and invest for long-term results to deliver best-in-class integrated solutions

“With the supply chain that we have and the go-to-market strength and the scale, we feel very well positioned both in the new areas of technology and in the existing areas of technology today,” Dell Technologies CEO Michael Dell told journalists.

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Both Dell and EMC have seen declining markets in their respective core businesses as customers continue to transition to mobile devices and lower-margin servers and storage.

For example, analyst firm IDC reported this year that PC shipments fell 9.8 per cent in 2013 and 10.4 per cent in 2015. IDC is forecasting another 7.3 per cent decline to $161 billion in sales for 2016. Meanwhile, the server, storage, and network hardware market has been declining since 2014 and is expected to experience at least a 1.3 per cent annual drop in the next four years.

Click here to find out what IDC thinks about the impact of the Dell-EMC merger.

EMC is considered by IDC to be the top storage vendor in sales and has a strong enterprise customer base. By merging with Dell, EMC can take advantage of Dell strength in the small and midsized market.

Industry observers see the deal as a huge gain for Dell since it is acquiring not only a strong competitor in the enterprise storage market but also a way to move into the lucrative hybrid cloud computing arena.

While both Dell and EMC are already offering cloud services the two companies will become more deeply involved in combining their workload in the both public cloud or private data centres. The focus on hybrid cloud offerings could provide Dell Technologies some advantage over powerful cloud giants such as Amazon Web Service, Microsoft and Google and other vendors like Cisco, Dell, HPE and VMware.

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