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

Posted by Soulskill on from the go-big-or-go-home dept.

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.

15 of 116 comments (clear)

  1. I'm glad, now, ... by Drewdad · · Score: 5, Funny

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

    1. Re:I'm glad, now, ... by jellomizer · · Score: 5, Insightful

      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.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    2. Re:I'm glad, now, ... by ERJ · · Score: 3, Insightful

      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.

    3. Re:I'm glad, now, ... by swb · · Score: 5, Insightful

      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.

    4. Re:I'm glad, now, ... by jbengt · · Score: 3, Informative

      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.

    5. Re:I'm glad, now, ... by Anonymous Coward · · Score: 3, Informative

      So this and other comments like it seem strange to me. The VMs run on actual servers, not virtual ones. The actual servers have to be high availability before any software that runs on them. And how can you virtualize additional OS's without adding more CPUs, RAM, and disk space without making a joke of what you are running?Presumably you add OS's to actually do something. And in my experience those somethings happen concurrently with what happens in multiple virtual OS's on the physical box. Otherwise you wouldn't need multiple OS's now, would you? And they all require resources. And a host is a host is a host, VM or not. When was the last time you only had to patch one host? You normally will have to patch all of them. Unless of course you run a different operating system for every one of your servers. And I don't know many places that do that (at least not any place of any size). Sure there is some economy of scale virtualizing machines and there are virtues in virtualizing; you can share some resources and save on hardware where appropriate. But I'm surprised to hear anyone say it is for high availability. If anything, it seems like one *huge* point of failure is being described here.

      Yes to a point but if you HA the ESX Hosts (that run the VMs) you can patch and failover/failback your ESX Hosts and so your VMs. You can also move your VMs that happen to be using more resources to ESX Hosts that have more resources available.

      As to running different OSs in VMs, that is more common that you think. We have plenty of end users that run third party apps or custom apps that require certain versions of older or different *NIX hosts that can now all run on 'commodity' Hardware virtualized by VMware (or Hyper-V or XEN).

      It does make managing Servers simpler - they still need managing but it is simpler. The amount of power and hardware is cut drastically, remember that in the old days those 50 servers requiring all that HVAC and Power (and space) were not always running at 100% of their capacity. Now you have a handful of high-end servers that can manage all those 50+ VMs with less power (and space) and it doesn't matter if they aren't running 100% of their capacity, the other VMs will take what is not being used thankyouverymuch.

      It isn't the be-all-and-end-all as people make out - there are still horrendous potentials for performance bottlenecks for things like SAN attached storage and much more understanding of how your virtual networking and virtualized storage connections all tie together, but overall for many, many cases it is a huge cost saver.

  2. Your mortgage got you stressed? by willworkforbeer · · Score: 4, Interesting

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

    --
    Pretending this is my office full of bitter coworkers..
    1. Re:Your mortgage got you stressed? by willworkforbeer · · Score: 4, Insightful

      Who cares? It is not my debt, it is my company's debt. I can take a vacation to Hawaii, while the company crashes and burns (ie sheds/restructures debt through bankruptcy proceedings).

      If you believe this kind of deep leverage will not affect the cultures at these companies, from the top down, you're probably mistaken.

      --
      Pretending this is my office full of bitter coworkers..
    2. Re:Your mortgage got you stressed? by Drewdad · · Score: 3, Interesting

      Uh.... They H1B visa program would seem to refute this assertion.

    3. Re:Your mortgage got you stressed? by gtall · · Score: 4, Informative

      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.

    4. Re:Your mortgage got you stressed? by Anonymous Coward · · Score: 3, Insightful

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

      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.

  3. Post PC strategy by Anonymous Coward · · Score: 3, Interesting

    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.

  4. Will they corrupt VMware? by swb · · Score: 5, Interesting

    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.

  5. re: VMWare and cost by King_TJ · · Score: 3, Insightful

    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.

  6. Some pro/cons by grilled-cheese · · Score: 3, Insightful

    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.