Dell 'going back in time' with EMC buy - Context

Analyst brands move 'stunning' and says it is positive for the channel

Analyst Context has said Dell is "going back in time" with its planned EMC acquisition but insists the "sound" logic of the deal will be good news for the duo's partners.

Yesterday, Dell announced plans to buy EMC for $67bn in a deal that is set to become the world's largest tech acquisition. The strategy behind the move appears to directly contradict that of rival HP, which in just a few weeks will split itself into two smaller, separate companies. Symantec is also pursuing a split of its own, also in a bid to become more focused.

The contradictory nature of the Dell-EMC merger is surprising, according to Context founder Jeremy Davies.

"I think it's quite stunning, obviously, the size of the deal, for one," he said. "But it is also quite stunning we're seeing things go the other way. If you look at what other large tech companies are doing, like HP, they are trying to split themselves into components that can be more easily managed and maybe more agile."

He said Dell's strategy is reminiscent of that of other tech firms in the past.

"And here we are, Dell and EMC, almost going back in time to become like an IBM," he said. "I think it's pretty incredible from that point of view. The logic is sound, no one can dispute it."

Megabuyte analyst Rob Warensjo agreed that Dell's strategy to get even bigger with such a huge acquisition is unusual in today's market.

"From a strategic perspective, the deal flies in the face of the current trend towards corporate break-ups as the monolithic beasts of the previous tech generation seek to regain their competitiveness by operating in smaller units," he said. "Against this background, we see significant challenges for the enlarged group although perhaps revenue and cost synergies may be less of a driver than an epic level of financial engineering."

According to Context data, Dell and EMC are "way down outside the top 10" in terms of total revenue through distribution in the EMEA region, but should the deal come off, they will be propelled much higher.

"I think it is good for the channel. I looked at the numbers - I looked at EMC and Dell and VMware's revenue through our distribution panel - and if this thing comes off, this new Dell-EMC will be number five or six in terms of total revenue in the distribution panel," he said. "So they will become a major player for partners and distributors. They will become very, very, very important. Together they will be a serious force to be reckoned with in the channel."