Last week we mentioned the potential acquisition of EMC Corporation by Dell, with EMC reportedly being valued at around $50 billion. While previously just rumors, the talk has been substantiated in a mutual announcement from the two organizations. Valued at approximately $67 billion (~$33.15 per share), this deal is not only one of the largest ever in the tech industry; it’s massive within the business world in general.
In light of recent declining computer sales, the acquisition will add much needed enterprise services to Dell’s offerings, such as virtualization software VMware as well as an expansion to Dell’s current cloud and security capabilities. Despite these advantages, such a massive deal does beg a very fundamental question: Why is it worth the $67 billion price tag to Dell?
To put it simply, they know the direction the tech industry is headed, and it is not a future they can survive alone. One of the chief concerns is that the rise of cloud computing is an industry trend that can no longer be ignored. And since EMC has built much of their business on physical enterprise storage solutions, AKA something the cloud is replacing, they certainly can’t ignore it either.
Tech giants Amazon, Google, and Facebook have pioneered the public cloud computing industry and all offer cloud storage as a more cost-effective and scalable enterprise storage solution than the prohibitive costs many businesses face when attempting to build their own infrastructure. It’s a little like leasing space in their databases rather than building one’s own.
Microsoft has also stepped up to the plate and is actually offering quite a lot on the cloud computing front, not only because Forrester predicts public cloud reaching the $191 billion mark by 2020, but also because they have not been able to push Windows onto very many mobile devices, another rapidly-growing industry.
There are many more reasons this Dell-EMC deal is necessary, though the cloud is probably the most important. Regardless of how it works out for them, it marks an important change in the technology industry. With the rise of cloud, tech giants are finally seeing pretty big changes in how they have to do business, particularly in the enterprise space. It will not be surprising if other Dell competitors, such as HP or IBM, find partners to team up with in the near future. No matter how many billions of dollars these tech corporations make in a year, it will become increasingly difficult to compete with corporations like Amazon, Google, and Facebook if they haven’t already jumped on board the cloud bandwagon.
Gillware feels very fortunate to have jumped on that bandwagon fairly early and have been offering cloud-based backup services for quite a long time now. Though we can’t afford the massive infrastructure that Amazon currently has, our offerings are certainly better in terms of customizability and personalization, not to mention our stellar customer service team. In any case, who is to say what the cloud computing industry will look like in 10 years? Maybe we’ll be competing with Dell and Amazon too.