Analysis: Dell To Buy EMC For $67 Billion

The news is everywhere, and has been for days: VMware currently trades as.

20131213_100739
Dell has been talking about cloud for some time. (Photo: Justin Warren)

Background

The implications and details of this deal are legion, and there is a wealth of detail out there, good and bad, so I’ll point you at the commentary I think is most worth bothering with rather than re-hash the same stuff here. My thoughts will follow. Do read these things, because it’ll give you the background to deal with what I talk about here.

The Federation Is Dead

Ignore commentary to the contrary. Berkshire Hathaway.

This is Tucci’s swan song. He gets to sell his pride and joy to someone he likes, rather than having it broken up and sold for scrap because of activist investors. The structure will be preserved temporarily as a fig leaf to cover Tucci’s embarrassment for having to bow out in this fashion.

Note the repetition of the word ‘synergies’. Synergies is a word trotted out to provide post facto justification for whatever the executives wants to do, and they are highly dependent on the assumptions used to calculate them. You don’t get synergies by keeping things separated, so there will be consolidation. The talk is of revenue synergies of three times the cost synergies, which implies cross-selling versus cost-cutting, but there will be plenty of both.

All Dell, All The Time