Dell To Name the Biggest Merger in Tech History
Dell Chair and CEO, Michael Dell announced at the EMC World Conference in Las Vegas that the biggest merger in tech history will be declared by Dell Technologies. There is an exception that the pure Dell name will remain for the company's client business (including its PCs), although its enterprise infrastructure division will be called Dell EMC.
"In thinking about what to call our new company, we really wanted to convey a sense of being a family of businesses and align capabilities," Mr.Dell explained. "And as family names go, well, I'm kind of attached to Dell. So in that spirit...after the close of the transaction, our family of businesses will officially be known as Dell Technologies."
The Dell-EMC integration team is currently working on the visual identity for the new company and its sub-brands. The visual identity will be disclosed when the transaction closes.
For those who aren’t acquainted with the merger, Dell announced in October last year that it would be acquiring the tech company, EMC, for $67 billion which is considered the largest deal in tech history. However, the merger involves a substantial amount of debt, approximately $50 billion. Therefore, both companies have been planning to dispose of as many “non-core assets” as they can, in order to diminish the financial burden. In this regard, Dell recently made a deal to sell its IT services unit, formerly Perot Systems business, to NTT Data for $3.05B, and is said to be looking to sell software to Quest (systems management software) and SonicWALL (security hardware/software) for a combined $4B. Besides these, EMC Corp. wants to shed its content management business, Documentum, which we will dig a little deeper shortly.
The merger will also tie together several related companies and brands controlled by the two larger parent companies: VMware, Pivotal, SecureWorks, RSA, and Virtustream. Dell and EMC expect the buyout to be completed by October. The deal is awaiting regulatory approval from the US and Chinese authorities as well as a green light from shareholders.
After this brief summary of the on-going acquisition, let’s go back to the event. Michael Dell after announcing “Dell Technologies” as the new identity for EMC-Dell merger at the opening ceremony during the EMC World 2016, took a moment to criticize his competitor HP which is trying to grow by downsizing:
“Competitors like HP are shrinking their rate of success. You can’t shrink your way to success. That’s not even a real thing. But they’re doing it, they’re getting slower.”
He also added: “They’re separating their edge from their core with far less innovation, less investment in R&D, less software, a smaller supply chain, and losing share in each of their businesses to Dell, even right now in this period.”
However, according to Securities and Exchange Commission filing, Dell said they spent $1.27 billion on research, development and engineering for the fiscal year ending January 29, 2016, a 2.4 percent year-over-year increase. On the other hand, HP Inc. and Hewlett-Packard Enterprise (HPE) spent $3.5 billion on R&D in the fiscal year 2015, up from $3.44 billion in the year before. These figures demonstrate that Dell itself spends far less on R&D than either EMC or HP and HPE.
With optimism, he stated: “We’re going in the opposite direction. Building, while fostering speed, agility, and innovation. By combining Dell with EMC, we can become the essential technology infrastructure for the next industrial revolution.”
Meanwhile, Dell gained 2.5 points of market share in Q1 2016, while HP lost 2.4 points of share, according to IDC. Michael Dell was also keen to highlight these figures in his speech:
“We have incredible momentum, gaining [in client solutions] for 13 straight quarters. In the US, our client business grew four percent and in the very same period, HP’s client business declined fourteen percent. Plus four for Dell, minus 14 for HP.”
HPE replied in a statement by saying: "The Dell/EMC and HPE strategies are in stark contrast of one another. Dell/EMC are looking to get larger, lever up their balance sheet, and double-down on mostly legacy technology. HPE is more focused, de-levering the balance sheet, and leaning into new technology. We like our strategy and have already seen evidence in our results."
HP Inc. responded with a statement: "HP has one of the strongest product line-ups in our history. The technologies we're bringing to market today are second to none in terms of style, performance, and quality. Combine that with the value our channel partners bring to customer engagements and our innovation pipeline, and we're confident that we'll outpace the market and the competition as Dell remains distracted with an acquisition sure to cause market uncertainty. HP is ready to seize that opportunity."
Howard Elias, President and COO of Global Enterprise Services at EMC and Dell-EMC Integration Leader, joined John Furrier and Dave Vellante, co-hosts of theCUBE, from theSiliconANGLE Media team during the EMC World 2016 conference in Las Vegas to explain where the merger stands at the moment, noting that Dell and EMC had partnered for years in a venture worth billions before the merger:
Aside from Mr. Dell’s speech, the event has seen a tranche of new products and services announcements made by EMC Federation companies. Here are the five major announcements:
Virtustream Storage Cloud
The Virtustream business, which EMC acquired in 2015, unveiled Virtustream Storage Cloud, a global cloud storage platform aimed at large enterprises, service providers, and public sector organizations that need to secure, manage, and store mission-critical data in the cloud. Michael Hoch, Senior Vice-President, Global Systems Integrator Alliances at Virtustream, said: “This connects easily and directly to on-premise EMC storage environments. It is available in the UK and mainland Europe, as well as the US.” It will offer enterprise-level resiliency and performance combined with true web scale available later this month.
EMC itself released a new family of affordable storage systems aimed at small to medium-sized enterprise (SME) customers.The EMC Unity portfolio is available in all-flash or hybrid array. Chris Ratcliffe, EMC Marketing Vice-President, said: “Unity has been designed from the ground up to appeal to SME customers, with all-flash arrays starting at a price of $18,000 and hybrid flash arrays from under $10,000.” Components include support for file, block and VVols, snapshots and remote replication, and integrated Copy Data Management.
EMC also announced MyService360, a new service-oriented cloud-based dashboard, which will be available at no additional cost to customers who currently have an EMC warranty or maintenance agreement. It is designed to provide a customizable view into the health and performance of the EMC data center environment and consolidate proactive monitoring of EMC systems deployed across a customer's global enterprise. MyService360 will replace the "My Support" tab of EMC Online Support.
EMC announced a new suite of cloud-native content apps called LEAP, which helps businesses solve their digital problems and get more out of their content. EMC hopes LEAP can speed companies toward digital transformation.
Five EMC-authored apps were announced in conjunction with LEAP:
LEAP Snap, an enterprise document capture app that pulls in relevant, unstructured data, and turns it into usable business content.
LEAP Courier, an app for internal and external secure document exchange, document validation, and tracking.
Leap Concert - collaborative document creation. A Google Docs-rescue tool for collaboration on a work document with specific permissions and workflows.
LEAP Express - browse, access, search and approve content, regardless of its location. An application that enables enterprise search of all business content across multiple platforms.
LEAP Focus - document consumption on mobile devices, with automatic reformatting to suit the device. A document viewing app that automatically reformats a digital document based on the form factor from which it was accessed.
LEAP Courier and Snap are available to a limited number of customers today and will be available in June. LEAP Concert, Express, and Focus are in active recruitment for beta customers this quarter with general availability in the second half of 2016. All LEAP offerings are available on pay-per-use subscription basis.
The quest for digitalization is making the Enterprise Content Management (ECM) market hot again, and LEAP is “fundamentally reinventing the industry,” Rohit Ghai, President at EMC Enterprise Content Division, told John Furrier and Dave Vellante, co-hosts of theCUBE, from theSiliconANGLE Media team, during an interview at EMC World 2016:
The idea for LEAP came from EMC's Enterprise Content Division (ECD) which has been associated with Documentum, one of the most widely used ECM platforms in the world. EMC'S ECD is offering LEAP for free to Documentum customers who are with current maintenance licenses, as part of its "LEAP Together" program.
When Alan Pelz-Sharpe, Vice President & Managing Director VOCalis with Digital Clarity Group and previous guest on The CMS-Connected Show, explained the story behind the Documentum divestiture last month, he expressed his disagreement with many people who claim that Documentum is an old technology. He believes it is not true and believes the opposite to be factual:
“Documentum is a strong company as they have very loyal customers. The business turns over $600M annually and has a 30 percent profit margin.”
Scott Liewehr, the co-host with the CMS-Connected Show and CEO & Co-founder of Digital Clarity Group also commented on the divestiture of Documentum and unveiled his bold prediction for the potential buyer on the most recent release of the show:
In order to leverage Documentum, the company announced the new release of Documentum 7.3. at the EMC World Conference. The upgraded version will be less expensive as the new technologies used for the infrastructure eliminate hypervisor-related expenses. The software will run on open-source as well as the proprietary database.
It seems like we will see much more announcements and divestitures until the merger of Dell and EMC is finalized. Dell believes that the acquisition of EMC, the world’s largest provider of data storage systems, “will create the world’s largest privately controlled, integrated technology company” in the $2 trillion information technology market. We will all follow how the deal shapes the market in the coming years.