Dell/EMC merger: Nothing but upside for IT leaders

Dell is attempting to buy storage maker EMC. Here's how the deal could impact IT leaders and the broader tech industry.

Dell CEO and Chairman of the Board Michael Dell
Image: James Martin/CNET

Dell's proposed acquisition of EMC is one of the largest tech deals in history, valuing EMC at $67B. The deal would effectively take EMC private, as Dell is currently a private company, relieving the combined company from some of the pressures and disclosure requirements that public companies face.

Where does the "the new Dell" go from here?

Dell and EMC are no strangers to IT leaders, with offerings that cover every corner of the market, from single-server small businesses to Fortune 50 enterprises that were the traditional stronghold of EMC.

Five years ago, a combination of Dell and EMC would have made perfect sense; they could cover every IT hardware need from laptops to storage networks. Now most IT leaders are looking at ways to reduce their hardware footprint and shift resources to cloud platforms. Broadly, two potential avenues exist for "the new Dell" to succeed.

The first is to become the de facto IT infrastructure provider in what's arguably a shrinking market. IBM still has a lucrative mainframe division, and so, too, could Dell "own" the IT infrastructure market even as it shrinks due to companies moving their infrastructure to the cloud.

The other potential path is to become a "data center as a service" provider, by leveraging the VMware technologies that come along with the EMC acquisition. Companies of any size could presumably ring up the new Dell, and have a complete data center provisioned with their exact mix of virtual and physical hardware, a proposition few other providers can match.

What this deal could mean for IT leaders

In the short term, IT leaders who routinely deal with Dell, EMC, or a combination of both will likely experience some transition pains, with the potential upside of discounts resulting from the disruptions and consolidation of accounts.

With the software and hardware portfolio that EMC brings to the table, Dell has perhaps the most compelling claim to being a "complete" data center provider for companies of any size. While IBM and HP are divesting portions of their hardware business, Dell has beefed up its services and software arms and has the potential of dominating the dwindling number of data centers. Just as IT leaders are generally seeking to consolidate infrastructure, there are obvious benefits to consolidating around a limited number of vendors, and the combined company could make a compelling case to be a sole source for infrastructure and support services.

The more interesting capability that the new Dell could provide IT leaders is reducing the perception that cloud is an either/or proposition, or that is requires a convoluted hybrid cloud approach that demands integrating multiple vendors and platforms. The new Dell could theoretically sell your physical data center and a cloud platform at subscription or utilization-based pricing, allowing IT leaders to get the best capabilities of physical and cloud infrastructure, and also the compelling pricing of a pure cloud solution.

Dell remains one of the only traditional IT infrastructure companies not being beaten up by investors or plagued by constant, highly public restructurings. A vendor that is focused on delivery and winning in the marketplace might be just the ticket vs. a vendor that is constantly restructuring and reorganizing to appease disgruntled investors.

In any event, while it may be tempting to consider Dell and EMC "old line" IT companies, the combination appears to offer nothing but upside for IT leaders in a time of increasing options and increasing interest in technology as a core corporate asset.

Also see on ZDNet

Note: TechRepublic, ZDNet, and CNET are CBS Interactive properties.


Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

Editor's Picks

Free Newsletters, In your Inbox