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Why is Dell buying EMC for $67 billion?

One of the biggest takeover in the technology industry – Dell to acquire network storage giant EMC Corp. for approximately $67 billion – now that is really huge.

In an interview on CNBC, Michael Dell said that “the revenue synergies here are three times larger than the cost synergies.” On the other hand, EMC CEO Joe Tucci noted that Dell will give EMC a great channel for more of its products. “For many vendors where Dell is the number one reseller. Now we’ll favor the family products.”

Michael Dell would become chairman and CEO of the combined company. EMC chairman and CEO Joe Tucci would remain in that position until the deal closes.

Now why is Dell buying EMC? Here is my take:

On the first look, one might say what are these two legacy companies doing? Yes, they may be legacy companies but they are two successful legacy companies.

The two needed each other to be able to compete strongly considering the advent of cloud infrastructure and with the emergence of new-generation competitors. Dell being strong in PC and EMC being strong in the storage area.

Let us not forget as well that Dell is not just buying EMC here. By acquiring EMC, Dell also acquired VMware, a virtualization and cloud computing software provider. Dell is also acquiring Pivotal, a company that provides software and services for the development of custom applications for data and analytics based on cloud computing technology.

Dell also gets RSA Security, Documentum and other smaller entities within EMC.

Dell and EMC have been partners selling data center hardware so it is beneficial to both to combine their resources to become a force to reckon with in the tech industry. But Dell buying EMC will help the PC company adapt to the ever changing tech landscape.

Just like in any merger, the only problem now is to make the two work seamlessly now that they belong to the same wing.

(Article written by: Jerry Liao)

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