4 reasons why Dell wants EMC
In a rapidly changing industry, old-line technology companies that don't find a way to adapt may find themselves marginalized as dinosaurs. With that in mind, here's what Dell is hoping to achieve with its $67 billion record purchase of the data-storage provider EMC:
- End the PC discounter image. Many still view Dell as a seller of discount personal computers. But the PC market continues to deflate. The future requires selling hardware and software to serve corporate IT needs.
- Round out its technology offerings. Dell offers servers, networking and storage systems already, but EMC is the leading provider of data storage. That would open more doors for Dell.
- Outpace competitors. Behind heavy hitters including Hewlett-Packard (HPQ), IBM (IBM), Cisco (CSCO) and EMC in selling services to large corporations, Dell's new size may help it swing deals that it could not land before.
- Gain access to VMWare. Virtualization, which allows companies to more efficiently use and manage computing resources, is critical to the success of modern IT operations. Dell has its own version, but VMWare is the market leader and EMC has a major stake in its former company.
The bet, however, could be a long shot. As cloud computing grows in popularity, centralized providers like Amazon (AMZN), Google (GOOG), and Microsoft (MSFT) will have more companies opting to forgo buying their own systems in favor of renting from a vendor more cheaply. That will mean fewer companies buying gear, and using what they do buy more efficiently. Google, for instance, has been building its own servers and networking gear for years.