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Dell will take EMC to mid market via channel

As more details emerge of the $67m deal by Dell to acquire EMC the intention to beef up the mid-market portfolio is clearly one of the main aims of the purchase

Dell expects it will be able to take EMC products into the mid market as it combines the two firms into a powerhouse that can deliver a set of products that hit all of the current hotspots, including digital transformation, hybrid cloud and converged data architecture.

Earlier today it emerged that Dell had made a $67bn bid for EMC and the two vendors had signed an agreement approving the acquisition, which could close in the middle of next year.

Speaking on a press and analyst call Michael Dell said that it brought strength in the small business and mid market space that would complement EMC’s strength in the enterprise market and it had global reach and a partner programme that meant it got to a large number of customers.

“The combination makes great sense because of the obvious ways our businesses complement each other and provide ways to grow,” he said that from desktops and servers it had a strong tradition in hardware and could now beef up its storage and data management options.

As part of the plans the Dell server business will be relocated to the EMC enterprise systems operation in Massechusets, but it stated that it did not plan to move a lot of staff around and senior EMC managers would also stay in place.

“Customer’s don’t want to have to integrate them themselves so to become the leader in hybrid cloud, Software Defined Datacentres we have put ourselves in a powerful position,” he said that although EMC was in the mid-market it could provide more muscle, “EMC is in those spaces today but we have a much greater combined go to market and channel strength.”

When it comes to the way the new company would work with other vendors Dell said that he would continue with the existing vendor alliances with the likes of Microsoft and Cisco and it would be looking to work with more in the industry ecosystem and it would not be choosing VMware exclusively in the future and would be open to other virtualisation players.

There were some questions that the management faced on the financing for the deal but Michael Dell said that it had already received great support from the banks and felt that it was going to be in a position to gain cash flows from the combined businesses in the first 18-24 months that would help it pay back any debt it racked up financing the deal.

“Our ability to pay down debt is demonstrated by the histories of Dell and EMC,” said Tom Sweet, Dell CFO and he also referenced the experiences of when it went private illustrating how reliable it was at paying down its debt over the last couple of years.

Joe Tucci, chairman and CEO, said that the transformation in the industry was disrupting the old ways of delivering IT and that was throwing up new opportunities as users looked to trawl through much more data to gain insights in real time.

“Coming together makes so much sense and we wanted to do it in an attractive way for investors and to get a fair deal,” he added that the “mothership being private” also had attractions in the long term.

Egon Durban, managing director of Silver Lake, said that it had backed the investment because the new company would be in a position to take advantage of industry trends and could innovate to meet the evolving demands of customers.

“The company will be by far the largest company addressing the enterprise customer,” he said that being private would enable it to make investments on a long term basis and EMC’s management and staff would benefit from that situation.​

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