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What the Dell, EMC merger really means

Patrick Thibodeau and Lucas Mearian | Oct. 13, 2015
Despite its US$67 billion price tag, the deal isn't likely to reshape the tech market.

"You are not losing a lot of customer choice as a result of the deal," said Del Prete. The products made by Dell and EMC "are largely complementary."

With EMC, Dell may get some more pricing power, said Del Prete, but Oracle, HP and IBM all have "some real compelling products as well. I don't see where a lot of my choices go away," he said.

For its part, VMware remains an independent and publicly traded firm, but Dell will be the controlling force. One competitor to VMware, Citrix, is reportedly up for sale. Dell was a rumored buyer, but there was no mention of Citrix today. On the call, Dell touted his firm's strong relationship with Microsoft, which makes a competing virtualization platform, and there's no reason to suspect this will change.

Impact on HP and IBM

As Dell works to create an ever-larger firm, Hewlett-Packard is splitting itself in two, creating a high-margin enterprise business and low-margin PC business.

Analysts believe the Dell and EMC merger is bad news for HP. With EMC, Dell improves its ability to compete well beyond the SMB market into higher-end enterprise markets, which increases HP's competition.

The acquisition gives Dell direct access to large enterprises, said Charles King, an analyst at Pund-IT. Dell is "growing at time that HP is pulling back and fragmenting."

IBM's strategy, increasingly, is to invest in software platforms and artificial intelligence, a direction that is "profoundly futurist," said Glenn O'Donnell, an analyst at Forrester.

The bottom line, is that Dell-EMC combination will give Dell what it needs to compete with the likes of HP, Cisco, IBM and, increasingly, lower-end players such as Huawei, said O'Donnell.


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