Michael Dell explains his US$67 billion EMC bet

Re/code interviewed Michael Dell in Michael Dell Explains His $67 Billion Bet on EMC. He talks about his plan to pull off the biggest technology merger in history, one that will create a business with an annual turnover of US$80 billion.

The story leads with the point I made last week: big technology mergers rarely succeed. There’s little here to convince me that Dell has something special that the earlier companies attempting large takeovers didn’t have.

And as the story points out, Dell is moving in the opposite direction to HP which is separating its PC business from its enterprise computing operation. HP has more experience than any other company with large scale technology take-overs, none of them were a resounding success. If HP couldn’t get it right by the third try (and a huge takeover) then it’s unlikely Dell can.

If Dell was still a public company, shareholders would be furious at this move. Presumably Michael Dell took the business private so he could make a big play without worrying about keeping investors happy. But I can’t help thinking that at bottom this deal, like so many tech industry mega-mergers, it more about egos than unlocking business value.

One thought on “Michael Dell explains his US$67 billion EMC bet

  1. From what I’ve read securing EMC businesses would drop PC based revenues from 50% of the overall business down to 30%. Diversifying the main business away from PC’s seems like a good idea but it is a giant bet. Will the merger provide value above its funding costs? I would have said that EMC had reached its peak usefulness and AWS and the like will eat its lunch more and more.

    Like any business strategy play Dell will be hoping that VMware and maybe some of the other parts of EMC are the real treasure there. Whatever the outcome Dell has the advantage of less public scrutiny and I’d guess the real game plan has not been revealed yet.

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