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10/22/2015
08:06 AM
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Michael Dell Defends His $67B Bet On EMC

Michael Dell positioned his company for a new age with a slew of new product announcements at Dell World Live. He also answered questions about the $67 billion deal to acquire EMC. Here are the details.



Dell, EMC Deal: 10 Things IT Needs To Know
Dell, EMC Deal: 10 Things IT Needs To Know
(Click image for larger view and slideshow.)

Michael Dell defended against criticisms of his company's acquisition of EMC during his keynote address at Dell World Live on Wednesday and in related interviews with Bloomberg. The Dell CEO also spoke broadly about future strategies and specific product line directions.

It's been a big month for Dell and his namesake company following news of its plans to acquire tech giant EMC for $67 billion.

Some pundits have said the deal is doomed from the start due to its focus on commodity hardware, such as storage, PCs, and servers. These industry observers say that Dell, and other tech companies like it, are facing new threats as corporate customers move their workloads into public and private clouds.

[Looking for more on Dell's EMC deal? Read Dell's EMC Acquisition: Perils, Opportunities Abound.]

Michael Dell didn't see it that way, and the CEO used his keynote address to position Dell's product lines as the beneficiaries of this move to the cloud.

(Image: DellWorldLive via Dell)

(Image: DellWorldLive via Dell)

Dell's new product announcements this week included:

  • A lineup of Dell Datacenter Scalable Solutions designed for telcos, Web hosting companies, and others that operate data centers
  • Version 13 of Dell's Statistica advanced analytics software
  • The Dell Gateway 5000, a purpose-built appliance for factory and automation settings that utilizes the Internet of Things (IoT) and advanced analytics
  • A series of new Dell clients

Dell's chief executive also mentioned a new partnership between Statistica and Microsoft Azure, and plans to add to the Pivotal big data suite, which joins the company as part of the EMC deal.

In an interview broadcast on Bloomberg ahead of his keynote, he promoted the benefits of the EMC acquisition. The combination of two big tech companies is the opposite of what Dell rival HP is doing as it splits itself into two smaller companies next month.

According to Michael Dell, the deal with EMC would drive costs out of Dell's manufacturing supply chain.

"This is a business where scale matters," he said. "We have grown up in this industry and seen the power of scale. If you think of what goes into the data center, it is microprocessors, memory, and storage. Those are also the same ingredients that you find in client devices and the Internet of Things." 

During his Dell World keynote, the company's founder said that there are 1.8 billion PCs in the world, and 600 million of them are more than six years old. PCs themselves are being embedded into other devices now. Dell has also gained PC marketshare for the last 11 quarters.

Nonetheless, he said he has no plans to take Dell into the mobile phone business after watching one of his competitors fail at it. There's already one company in the space that does mobile phones really well, he said.

Michael Dell said that there would be some layoffs to come in the wake of the EMC acquisition, but that those would not be the primary focus. This deal is about revenue synergies, he said. On the other side, the company is hiring "thousands" of sales people around the world.

What about all the giant tech acquisitions that did not work out so well?

Bloomberg specifically asked how Dell's deal would be different from HP buying Compaq. Michael Dell said that the Dell-EMC deal is different because the principals of the companies in this deal are at the center of it. Also, the overlap of technology is minimal, and Dell has an aggressive timetable for paying down the debt incurred to finance the deal.

"It's not about combining existing businesses," Dell told Bloomberg. He said as well that he has plans to pay down the billions of dollars of debt used to finance the deal "pretty rapidly" in the next 18 to 24 months.

Jessica Davis has spent a career covering the intersection of business and technology at titles including IDG's Infoworld, Ziff Davis Enterprise's eWeek and Channel Insider, and Penton Technology's MSPmentor. She's passionate about the practical use of business intelligence, ... View Full Bio

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