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Businesses Data Storage The Almighty Buck IT

Dell To Buy EMC For $67 Billion (nytimes.com) 116

im_thatoneguy writes: After days of rumors, the NY Times is reporting that Dell will in fact be acquiring storage company (and VMWare parent) EMC in a record $67B deal being financed by a consortium of banks. Dell has confirmed the deal on their website.

Under the deal, Dell will pay $33.15 a share, which represents a premium even on top of EMC's current value, which had already jumped on initials rumors of a $50B acquisition last week. However, insiders say the deal won't be a straight forward cash buy-out of stock holders. Instead, EMC investors will receive about 70% in cash and the remainder in what's called a Tracking Stock, which will track the performance of just the VMWare Division within the new organization.

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Dell To Buy EMC For $67 Billion

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  • by Drewdad ( 1738014 ) on Monday October 12, 2015 @08:26AM (#50708153)

    ...that I didn't get that job with VMware.

    • by jellomizer ( 103300 ) on Monday October 12, 2015 @08:43AM (#50708235)

      VMWare seems like the unit that would actually be making money. However the licenses are really expensive, there are much affordable alternatives out there, but there are still too many muckety-mucks out there who think the most expensive product is still the best, and they should only get the best. However those free/cheaper solutions may or may not be as good, but you may be able to deal with greater growth for less.

      Not that VMWare is bad, it is a good product, it is just really expensive, to the point where you can consider getting additional low end servers vs virtualizing them.

      • Don't get me wrong, I love the VMware product.

        I just don't want to work for Dell. It has a worse reputation in Austin than Samsung, and that's saying something....

      • by ERJ ( 600451 ) on Monday October 12, 2015 @08:52AM (#50708285)
        It certainly depends on the use case. Datacenter power and rack space is expensive. If your cost is $100 / month for the additional power and rack for your extra server the vmware package starts to make sense. But yeah, when you get all the bells and whistles VMware can get crazy expensive.
        • by Anonymous Coward

          if you are getting all the bells and whistles, comparing cost to bare metal is pretty irrelevant...you are getting a lot of added value.

      • by swb ( 14022 ) on Monday October 12, 2015 @09:10AM (#50708403)

        I think the core virtualization services are tough to beat. Where I work we do both VMware and Hyper-V, and while Hyper-V is pretty close in features most of us that work with both prefer VMware -- there are just too many weird cases where Hyper-V just doesn't work right, but it is popular among cost-cutters.

        Not that VMWare is bad, it is a good product, it is just really expensive, to the point where you can consider getting additional low end servers vs virtualizing them.

        The problem with this is that with virtualization you get VM backup and a lot of storage efficiencies you'd never get with single servers, not to mention high availability or hardware replacement. I'm pretty sure low end licenses like Essentials Plus are still cheaper even at 3-4 VMs than additional physical hardware, especially if you have to do better than "low end servers". I'm sure there's some extreme cheapskate math that works in the more hardware method, but you sacrifice a lot of flexibility and you have to also deal with great switching port counts.

        IMHO, the problem VMware has is largely that the problem of virtualization is mostly solved and it's hard to grow the business without coming up with lots of add-ons.

        • Re: (Score:3, Insightful)

          by Bengie ( 1121981 )
          VMs are rarely the correct answer for environment isolation anyway. VMs are when you absolutely need to run a different OS than the host. For everything else, use jails.
      • by Anonymous Coward

        Not that VMWare is bad, it is a good product, it is just really expensive, to the point where you can consider getting additional low end servers vs virtualizing them.

        LOL.

        I have ~10,000 VMs. On ~100 Dell R720s.

        'getting a few more' would be slightly unmanageable.

      • by KGIII ( 973947 )

        I have a couple of licensed versions of VMWare. I love it. It's simple enough for a David to use and it just works. I've not yet found any other product that was as seamless and easy to configure. The network bridging that it does is awesome for what I use it for. On top of that, thanks to Slashdot, I'm now a shareholder in the company. I've not checked to see where the prices are today but they've quite likely gone up.

        I grabbed some shares when the last thread went around. I figured it was a good risk. I'l

        • The U.S. stock market was closed today.... so you're selling tomorrow at least.

          • by KGIII ( 973947 )

            Heh, cool. I still hadn't checked. LOL I did mention that I have no idea what the hell I'm doing. I wonder why it closed? It's only considered a holiday in a few states I thought. I'm glad I didn't check - thanks for telling me. I'd have been awfully confused. I got busy playing with Vivaldi. I'd poked at it a few times and finally started poking at it more a couple of days ago and then a lot last night. And then a lot today. It's kind of nifty, the idea at least. I'm drawing down the snapshot from the PPA

      • by King_TJ ( 85913 ) on Monday October 12, 2015 @10:10AM (#50708949) Journal

        Really, the one thing that made VMWare suddenly appear expensive was Microsoft's move to support the same basic functionality built into Windows Server via Hyper-V. Until that happened, your only other "enterprise-grade" solution came from Citrix and had a price tag comparable to VMWare.

        VMWare is still available in a free version though, if all you need is the need to virtualize a number of systems on a single server. (That's all we never needed at my previous job working for a small manufacturing firm. We built one high-spec rack mount server and virtualized 5 of the older physical machines to consolidate it into one box with more drive space and usable RAM.)

        And if you start considering paying VMWare's price for all of the "vmotion" licensing related to moving VMs between virtual servers, etc.? Depending on what you actually need - you might be able to save some money just going with VMWare "essentials" instead and combining it with the 3rd. party Veeam backup software. Veeam partnered up with VMWare so their backup product can utilize some direct hooks in VMWare itself, to do things that are usually off limits to other applications not made by VMWare.

        • by swb ( 14022 )

          I have yet to find a use case for VMware SRM where Veeam replication wasn't simpler, more transparent and more flexible.

          The one feature missing from Essentials Plus that is useful is storage VMotion. The gotcha is that most small sites don't use it often enough to justify the licensing charge for it. But when you need it, there's really no third party VMware solution that can match moving a running VMs storage from one storage location to another without disruption.

      • Not that VMWare is bad, it is a good product, it is just really expensive, to the point where you can consider getting additional low end servers vs virtualizing them.

        Oh, it's definitely *cheaper* to virtualize multiple low-end servers. But you don't get live-migration. You can't back up the image and migrate it to a similar but different machine. You can't spin up additional instances on a moment's notice. You can't build a megabox where sometimes a single virtual machine takes up 64GB of RAM and other times is a small 2GB fly on the wall. You lose performance with virtualization (In my testing about 10-15%) but you gain a lot of ease of maintenance.

        We have a rend

    • by thaylin ( 555395 )

      Question, did the job come with stock options, cause if so you probably should be kicking yourself.

      • I interviewed in the last couple of months, so no.

    • by jbengt ( 874751 ) on Monday October 12, 2015 @09:42AM (#50708635)
      VMware was a separate, publicly traded company, with EMC holding the majority of stock. They are still a separate, publicly traded company, but, with Dell holding the majority of stock.
  • by willworkforbeer ( 924558 ) on Monday October 12, 2015 @08:27AM (#50708159)
    Imagine the pressure of waking up every day with a US$60Billion debt over your head. No pressure, sales weasels, no pressure at all.
    • by Anonymous Coward

      At least you can declare bankruptcy, liquidate everything, and be back on your feet in a few years.

      Worse is what's facing most of our college educated: $50,000-$150,000+ in unforgivable loans that can't be erased by bankruptcy.

    • by Anonymous Coward

      Imagine the pressure of waking up every day with a US$60Billion debt over your head. No pressure, sales weasels, no pressure at all.

      Not quite sure why you think large American companies feel pressure due to debt when they can simply ask for a government bailout.

      The auto industry managed to set that precedent nicely.

      • Re: (Score:3, Interesting)

        by jellomizer ( 103300 )

        Tech companies don't get the political love. Those are run by Geeks and Nerds (terms used in a derogatory form) those guys who the politicians would make fun of and insult as a kid. Unlike the auto industry who is filled with Hard Working Salt of the Earth workers, and creating a product that you can see and touch and buy to impress other people.

        Very Baby Boomer thinking. But that is the generation who is still in charge.
           

      • by gtall ( 79522 ) on Monday October 12, 2015 @09:09AM (#50708393)

        The auto industry paid most of the money back. Depending upon accounting rules, the U.S. lost approx. $9.8 billion to $16 billion. However, this does not count the dent in the U.S. economy and ultimately the tax receipts of NOT bailing out the auto industry (actually, just GM and Chrysler). That dent would have been very large and many people thrown out of work, not least the supply chain for that industry. There is a similar story with the banks paying their wad back.

        Whether you like it or not, a government is a giant insurance policy. We use it to protect the people from getting whacked, something the whiners about the ACA conveniently forget (would that we were all rich and employed). One can argue the banks and Wall Street are too big, and I'd heartily support breaking the former up and reducing the influence of the latter or at least taxing those leeches a lot more.

        • The auto industry paid most of the money back.

          Yes, they dug another tunnel and put the money in there.

        • Re: (Score:3, Insightful)

          by Anonymous Coward
          This is only true if you don't count the tax bills that the government forgave. http://www.wsj.com/articles/SB... [wsj.com]

          So in terms of what we lost from GM alone, the bill is closer to $60 billion. To prop up their unions, instead of letting another company come in and run them better. What a deal.
          • It's a far better deal than CBO estimate that the Iraq and Afghanistan wars will have cost us ~$2.5 trillion by 2017. $60 billion is a drop in the bucket in comparison.

            • by Zak3056 ( 69287 )

              It's a far better deal than CBO estimate that the Iraq and Afghanistan wars will have cost us ~$2.5 trillion by 2017. $60 billion is a drop in the bucket in comparison.

              non sequitur (nän sekwdr)
              noun - a conclusion or statement that does not logically follow from the previous argument or statement.

    • Thank God Dell's a private company now. I'm glad I sold when I did.
  • Post PC strategy (Score:3, Interesting)

    by Anonymous Coward on Monday October 12, 2015 @08:39AM (#50708215)

    Even Dell has realized no one buys PCs anymore. They are really smart to diversify into services, where there's still some profit to be made.

    • Except that most things they touch turn to shit. Like Symantec for hardware.

  • by moeinvt ( 851793 ) on Monday October 12, 2015 @09:08AM (#50708381)

    but I doubt it.

    Acquisitions that account for more than a small fraction of the acquiring company's overall value are risky and don't have a good track record. Both companies are fairly well, if not very well managed, so Dell execs aren't going to lend value to EMC's operations in that regard. EMC has positive earnings and is paying out dividends, so Dell won't be providing investment capital that EMC could not otherwise access.

    Looks like EMC closed with a market cap of ~$53B on Friday. A $67B acquisition is quite a huge premium on that price. Does the merger of their product lines into a more complete offering create significant value and additional revenue potential? Enough value and potential to justify the $14B premium that Dell is paying for the acquisition? I tend to doubt it.

    Of course with Dell being a private company, we won't have the detailed financial reports that we would see for a publicly traded company, so it will be harder to tell how it's going until they file for bankruptcy.

    This reeks of a desperate attempt to diversify by a company in a declining industry. Probably a good idea in principle, but going about it on this scale is quite the gamble.

    • by swb ( 14022 )

      It's hard to see how they will deal with EMC's storage lineup when they have barely dealt with the Equallogic/Compellent situation.

      Compellent still reeks of a lot of old school fiber channel oriented mindset and offers a lot of features and complexity that a lot of small-midsize organizations don't need or can't really use. Plus there is the longer-term question of what a tiering oriented storage system means in a future that seems increasingly destined to be all-flash based.

      Equallogic seems to cut out a l

    • by Junta ( 36770 )

      I agree with you. Note I think that the value of the two together is actually less than the two separate. I don't see a lot of upside to having those under one umbrella, on the flipside I see a great deal of headwinds as former partners of EMC and VMware push competitors harder now while they were content to partner with those companies before.

      Netapp, IBM, and Microsoft are in a pretty good position to get Dell competitors behind their products. Not crazy about MS' implementation, but expect there to be

    • by lucm ( 889690 )

      Acquisitions that account for more than a small fraction of the acquiring company's overall value are risky and don't have a good track record.

      Sure... like Oracle, Cisco, SAP, Google, AMD.

      And outside IT: AT&T, Verizon, Chrysler, Exxon, Comcat, Shell, Pfizer...

      Terrible track record.

  • by swb ( 14022 ) on Monday October 12, 2015 @09:27AM (#50708543)

    My worry about this is that Dell will corrupt VMware with hardware-specific "features".

    One thing that's been kid of nice about VMware up to this point is that they have been fairly hardware agnostic, which I think improves the innovation of pure virtualization. My worry is that with Dell ownership, they will put pressure on VMware to develop features which give an advantage to Dell hardware solutions.

    Maybe it'd be ultimately beneficial to further SDN or SDS, which seem hobbled by a lack of standards at the hardware interface level but I doubt such integration would be oriented at vendor-neutral public standards and more oriented towards monopoly standards.

    • by Anonymous Coward

      Historically, that has not happened yet although the options to do it have been there in the past. EMC SAN technology is no more integrated into VMWare than any other SAN. In fact, I'd say many of the other storage players have some very innovative integration that EMC itself does not even have. Same on the backup, replication, and DR pieces offered by VMWare itself, EMC, and/or third party. That doesn't mean Dell won't push for it though either though sale tactics but server hardware these days is 99%

      • I think the difference in the past vs the future is that Dell almost always tries to put their own ties into their subsidiaries.

        In 2-3 years, it'll be VirtualDell or some shit like that. And all of a sudden, chipsets for other vendors (UCS,HP) won't work as well.
        Or dedup for VSAN will magically never show up even though it was officially promised a month ago.

  • by ErichTheRed ( 39327 ) on Monday October 12, 2015 @10:19AM (#50709005)

    So it looks like Dell is doing what HP did on the storage front -- buy up a few competitors, merge the technology with the core line, and (possibly) have a big mess while everything consolidates. HP still sells production, ready-to-buy SANs from 3 different "vendors" (HP, 3Par, LeftHand) all while folding the features into something more unified. These consolidations are messy until they're finished, and I expect EMC with all its legacy stuff will be especially hard to merge with Compellent and Equalogic.

    What's more interesting is the fact that they now control VMWare. VMWare's the de facto standard for consolidation/vritualization, kind of like Java being the standard for enterprisey applications. Let's just say it would be very difficult for most large companies with on-premises hardware to move away from it. Hyper-V keeps getting more capable, but each of these big platforms has its issues. It sounds like Dell has 2 nice big cash cows -- VMWare licensing, where the vendor lock-in resembles IBM's mainframes or Microsoft Windows., plus EMC, whose reassuringly expensive storage boxes are actually unlimited ATMs connected to the customers' bank accounts. Like I posted previously, that trip through privatization must have washed away a whole lot of sins. That, or they're going into this using insane levels of debt, in which case stupid short term MBA moves might kill the company in an attempt to make the spreadsheets balance.

  • Dell should plow that huge sum into making far better computers than anything they have produced in the past. They have too many problems with existing products.
  • Some pro/cons (Score:4, Insightful)

    by grilled-cheese ( 889107 ) on Monday October 12, 2015 @12:06PM (#50710295)
    Dell has a history of doing a weird/terrible job at merging in company acquisitions. I'm looking at you Compellant/Equalogic, Wyse, Force10. I suspect EMC is going to be another one of those standalone assets for some time just because at the scale EMC operates, the contractual obligations to their large customers is going to make change slow.

    Looking at the storage assets alone, it's a bit strange to merge 3 competing companies together when they really havn't merged the first 2 after several years. The general vibe I've gotten from other peers is to stay away from Dell Storage with a 10ft pole, but EMC hardware was pretty good for traditional storage. When looking at the EMC storage products it's relevant to note the significant differences under the hood when it comes to VNX/VMAX/Isilon coming from the old Data General acquisition in 1999 and the new XtremIO arrays which was a totally different company until 2012.

    I do look forward to them eventually gutting whatever hair-brained system manages their support system. After years of working with EMC, I'm fleeing not because they make a poor product or a person does a poor job. Rather, it's because their SR management system is horrible. I shouldn't have to keep my support district manager's cell phone handy when they decide to route my SR into oblivion. I've worked with Dell for a long time as well and at least I can generally talk to a knowledgable human being without have to go through a checklist first.

    From a customer account perspective I'm also hopeful. I've had my account rep change 3 times in 2 years; none of which have actually made the trip across the US to see us face-to-face. On the other hand, recently Dell has made several relationship improvements. I actually see my dell rep and his engineer 2-3 times a year. This makes a huge difference in my opinion on the sales/account team.

    As a VMware customer as well, I don't see a significant difference in what will happen. EMC has generally been hands off when it comes to steering VMware. The only real advantage I've seen them take with their ownership is getting to be the first out of the gate with new VMware features, but it's not locking others out. If EMC was to take a strong hand in steering the VMware ship VSAN would never have seen the light of day and vVols would be an EMC exclusive. Likewise form VMware's perspective EVO:RAIL wouldn't have allowed any other partners to produce solutions if they weren't trying to be neutral.

    I'm hoping that Dell doesn't cannibalize or kill of the EMC Twinstrata acquisition. It will also be interesting to see what Dell does with some of the other EMC assets like RSA, Pivotal, Avamar, Data Domain, the plethora of hosting solutions, Greenplum, Mozy, Watch4Net, & Iomega.
    • by lucm ( 889690 )

      The general vibe I've gotten from other peers is to stay away from Dell Storage with a 10ft pole, but EMC hardware was pretty good for traditional storage.

      If I was you it's those peers I'd stay away with a 10ft pole, and this for two reasons:

      1) Dell has sold Dell-branded EMC hardware since forever

      2) Any of the few acquisitions made by Dell in the storage space over the last 10 years is absolute science-fiction compared to "bleeding edge" EMC

      EMC is a terrible company and they have dragged VMWare down. Hopefully Dell can salvage it.

      • The general vibe I've gotten from other peers is to stay away from Dell Storage with a 10ft pole, but EMC hardware was pretty good for traditional storage.

        If I was you it's those peers I'd stay away with a 10ft pole, and this for two reasons:

        1) Dell has sold Dell-branded EMC hardware since forever

        2) Any of the few acquisitions made by Dell in the storage space over the last 10 years is absolute science-fiction compared to "bleeding edge" EMC

        EMC is a terrible company and they have dragged VMWare down. Hopefully Dell can salvage it.

        Isilon is still good. It's basically everything I like about ZFS... with clustering. I'm not saying it's cheap, or that it's always the best solution, but Isilon is damned good at what it does.

        I'm curious to see what Dell does with it. And how long Isilon can keep using supermicro when they're part of Dell.

  • As a VMware customer, I'm sad to see this happen. I can hope that Dell stays "Hands Off" but that's not their style. Twice I've been bitten by a product or service I used acquired by Dell. Twice the product and support suffered and I phased it out. I hope that this time is different, but I doubt it. I guess I'd better brush up on Microsoft's platform. Honestly, I'd probably save some money too.
  • by Anonymous Coward

    from the horde of people in the recent 'rumor' [slashdot.org] saying that there was no fucking way dell could possibly pull off a buy of emc?

    never underestimate the will of a company hell-bent on buying another.. especially when combined with the will of a company hell-bent on being bought

    • by lucm ( 889690 )

      never underestimate the will of a company hell-bent on buying another.. especially when combined with the will of a company hell-bent on being bought

      Next in line is Tibco. Just like EMC, they have stopped any kind of innovation a long time ago and just positioned themselves to be bought, but unlike EMC nobody gives a shit about Tibco. When even Oracle doesn't want your middleware you suck big time.

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