Dell is a long-time and extremely important Microsoft partner, having manufactured Windows PCs since 1984 and spearheaded the direct sales of PCs. Arguably, Dell kick-started the nascent Windows PC market, utilizing innovative supply chain management to produce a stream of inexpensive but well-performing machines that turned the company in a multi-billion dollar behemoth.
However, Dell fell on hard times in the mid-2000’s, with PC sales flat lining and growth failing to keep up with the industry as a whole. In response to falling share prices, Dell went private in 2013, and since has produced some of the most critically acclaimed Windows machines, such as the excellent XPS 13 ultrabook.
At the same time, Dell cannot rely solely on a shrinking PC market for long-term viability. Therefore, the company has for years sought to improve revenues and margins by expanding into enterprise services, networking equipment, and cloud computing through a number of large and small acquisitions.
Today, as we learned via Business Insider, Dell has officially announced the acquisition of EMC, a global technology company offering a variety of networking, storage, cloud computing, and IT management solutions. The deal is massive at close to $67 billion, and will merge EMC into Dell to form a compelling competitor to Amazon Web Services and Microsoft Azure–regarding the latter, particularly in the enterprise. VMWare, the popular virtualization software, will remain a separate entity with Dell retaining control.
This is mixed news for Microsoft. While it strengthens Dell as a Windows OEM, the move also creates a formidable competitor in the increasingly-important cloud computing space. Time will tell if the merger is a net benefit for the Microsoft ecosystem. More details on the momentous acquisition can be found in Dell’s press release.
We’re likely to see more of these sorts of mergers as the PC industry continues to adjust to the sea change caused by the rise of mobile computing. Dell sucking up EMC creates a major ripple in the industry that Microsoft will need to consider as it continues to map out and implement its “mobile first, cloud first” strategy.Further reading: Acquisitions, Azure, Cloud Computing, Dell, EMC, Mergers