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Dell delivers on industry-defining EMC merger

James Henderson | Sept. 8, 2016
Dell Technologies becomes the world’s largest privately-controlled tech company.

As one of the world's biggest users of Dell and EMC, JPMorgan Chase spends approximately $US9 billion a year on technology, including infrastructure as well as cloud computing, big data analytics and cybersecurity.

"Financial services is one of the first-movers in embracing technology to better serve our customers, and the next wave of digitalisation continues a trend that's been occurring my whole lifetime," JPMorgan Chase chairman and CEO, Jamie Dimon, said.

"We make sure we spend wisely and select our partners very carefully. I've known Michael Dell for 30 years and we are eager to see everything they create in the future."

Yet despite the expected customer appraisals, loyalty will be tested in the short to midterm, with HP Enterprise, IBM, Lenovo, Cisco, Oracle and others launching customer take-away campaigns immediately.

Culturally speaking, balancing and redirecting the energies of two traditionally hardware-focused corporations into a new software-centric entity will impact every facet of both companies.

"Sales force, channel programs and systems integrators relationships, and their respective combinations, will be among the most visible and important of the outward-facing Dell-EMC changes," Technology Business Research principal analyst, Geoff Woollacott, said.

Pros and Cons

With regards to complementary assets, Dell Technologies' offerings range from $US200 consumer tablets to $US200 million business process outsourcing contracts, spanning the entire breadth of the industry.

"Dell has historic strengths in consumer, small business and the mid-market while EMC's historic strength lies in large enterprise," Woollacott added. "The new entity will have permission to play across all segments."

For Woollacott, Dell Technologies' infrastructure software stack is expected to deliver against broad customer pain points and needs, including software-defined data centre, with the merger giving the vendor "room to move", making it easier to shift or restructure legacy products and programs.

Yet on the flop side, Dell Technologies has taken on around $US40 billion in debt, making operating profit a main focus for the company, which significantly reduces its ability to acquire.

"The sheer size and breadth of the Dell-EMC entity makes for a difficult marriage," Woollacott added. "The new company will be significantly larger, therefore likely less nimble."

 

As the IT marketplace shifts, the overriding challenge for Dell Technologies will be whether it converges on the right trends, and perhaps crucially, whether the channel follows behind.

Michael Dell - chairman and CEO, Dell Technologies

 

 

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