Home Daily Blitz Dell’s EMC, VMware Buy Is A $67 Billion Bet On Cloud Computing That May Be Too Late
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Dell’s EMC, VMware Buy Is A $67 Billion Bet On Cloud Computing That May Be Too Late

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ibtimes articleThe following is an excerpt from David Gilbert | October 12, 2015 | ibtimes.com |

LONDON -- Dell’s record-breaking deal to purchase EMC is a $67 billion bet the PC industry is dead, and tech is now moving into an era when cloud computing dominates. The move shows Dell wants to own every aspect of business computing -- from hardware to services, security and big-data analysis. The question is, has that move come too late?

There's no shortage of competition. IBM acquired cloud specialist SoftLayer in 2013 for $2 billion after selling off its PC business to Lenovo in 2005. In the most recent quarter, Big Blue reported a 70 percent increase in cloud-related revenue. Oracle is on pace to post cloud revenues of $2 billion in fiscal year 2016, up from $1.5 billion the previous year. Microsoft is forging ahead with its Azure cloud platform, and Amazon Web Services is poised become the biggest player of all, with revenues up 81 percent in 2015 compared to last year.

What's driving the market? The cloud makes it easier and less costly for businesses -- from healthcare companies to Wall Street investment banks -- to store and process critical data. It's also where consumers are parking everything from music playlists to photos and contacts.

Michael Dell knew that trying to survive in the smartphone era as a company that primarily sold PCs was not sustainable. That's why in late 2013, with the backing of his partners at Silver Lake, he took the company he founded in his dorm room three decades ago private again, to give himself some breathing space from shareholders' demands.

His plan was to refocus on the enterprise market, and that vision came into sharp relief Monday when Dell announced the largest deal in the history of the enterprise technology industry with the $33.15-per-share takeover of EMC. The deal, which remains subject to regulatory approvals, includes EMC's 80 percent stake in VMware, which specializes in software that allows cloud providers to host and isolate data from multiple customers on a single server through a process known as virtualization. VMware trades separately and boasts a market cap of $40 billion, compared to $56 billion for EMC.

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