This morning, just hours after VMworld kicked off in Barcelona, Dell announces that they are to buy EMC for a whopping $65 Billion Dollars! Dell Inc. and EMC Corporation they have signed a definitive agreement under which Dell, together with its owners, Michael S. Dell, founder, chairman and chief executive officer of Dell, MSD Partners and Silver Lake, the global leader in technology investing, will acquire EMC Corporation, while maintaining VMware as a publicly-traded company.
Now, this is one of the largest ever IT takeovers, is it good or bad for the IT industries? Let’s look at a factor. Dell needed a storage company to gain traction, that part I understand. But, why EMC did not sell off VMware to another company, is a mystery. Dell sells servers, laptops, software, thin clients, storage, network and other stuff. This is also where I think a problem will arise from the dusk! I don’t beleive HP, NEC, SuperMicro aka other server vendors would preferred to sell their servers with vmware hypervisors. Will this fuel a quicker transition to free hypervisors such as Xen, XenServer from Citrix, KVM or Microsoft’s Hyper-V? We don’t know, but it actually makes sense if Microsoft and others push hardware vendors. EMC’s major milking cow the last couple of years is VMware, I’ve seen numbers of up to 80% of revenue came from VMware. A substantial amount of money in any company. Now, storage is not that big a deal anymore you might say, but still in the era of Cloud, everybody at the end of the day have the need for storage, they have the need for compute(either HyperConverged like Nutanix, which Dell actually OEMs…) or be that standard server computing power. These 2 factors will, well as far off into the future we can see, always be a requirement. Dell see this, and fends off competition, buy adding EMC to their shopping list.
The bad news? Dell getting a hugh market cap of the storage market, with less competition in the storage space it might be trouble for innovation. It’s going to be a intressting next 2-3 years, NetApp, Hewlett-Packard Hitachi Data Systems and IBM all in this “tech-war of storage”. As Dell are saying they will maintain VMware as a publicly-traded company. It might also come to that Microsoft now sees Dell as a huge competitor. But, I doubt that neither Dell, nor VMware wants to end up on wrong foot with Microsoft. VMware virtualized workloads is pretty much 90% Microsoft servers… so, stumping on Microsoft’s foot, would be a bad idea from the start(not that they have had the best of relations the last couple of years anyways…:) )
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