Dell is buying EMC, a $US50 billion publicly traded IT giant for around $US65 billion in one of the tech industry’s biggest mergers ever.
News of the deal first leaked last week.
A complicated merger
Assuming that nobody else comes in with a better offer, this Dell merger will be complex and costly to execute, given the sheer size and scope of both companies. But the payoff could mean that Dell gets a broader enterprise business, while EMC gets some breathing room after its recent troubles.
Dell, EMC, and VMware — which specialises in a technology called “virtualization” that helps companies make their data centres more efficient — have all been facing pressure from cloud services like Amazon Web Services, which lets customers outsource their data crunching and data storage needs to one of the e-retail giant’s hugely efficient data centres.
In addition, Dell has reportedly been hit hard by the sagging PC market, threatening its PC manufacturing business.
For its part, EMC has fallen on some hard times. Free software like Hadoop, which can be run on commodity servers, has seriously impacted EMC’s storage and data processing businesses, since it removes the need for customers to buy often-pricey software and hardware products.
EMC reportedly began a strategic review to explore various options last year. And over the summer, EMC vowed to cut $US850 million in expenses, prompting employees to start bracing themselves for mass layoffs.
Plus, long-time EMC CEO Joe Tucci was slated to retire in February 2015, but that didn’t happen. He has made no secret of the fact that he’s searching for his replacement. With the merger, that problem goes away.