Proposed Dell-EMC merger leaves customers divided

Proposed Dell-EMC merger leaves customers divided
Analysts: Dan Harrington, Michelle Bailey, Simon Robinson


Almost all of the attention paid to the record-setting $63bn deal by Dell to acquire EMC yesterday focused on financial details. But what really matters is how their customers react to this news, and whether they believe Dell can meet their organizational needs long-term. In general, customer perception is encouraging: 31% of IT decision-makers describe the acquisition as a positive move, compared to 20% that see it in a negative light. Dell customers are particularly positive about the deal; however, there are strong concerns among the EMC customer base. More than 40% of EMC-only customers (those that currently buy no products from Dell but do buy from EMC) have a negative impression of the acquisition, compared to just 15% of Dell customers. These findings are based on the opinions of 447 enterprise IT decision-makers – part of 451 Research's Voice of the Enterprise community – polled less than 24 hours after the announcement.
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Deal Analysis: In massive play for storage and more, Dell bets $63.1bn on EMC to reshape IT landscape

Analysts: Brenon Daly, Simon Robinson, John Abbott, Christian Renaud, Scott Crawford, William Fellows, Alan Pelz-Sharpe, Katy Ring, Matt Aslett, Chris Hazelton

Announcing the largest tech deal since the Internet bubble burst, Dell plans to pay approximately $63.1bn for EMC. The debt-laden combination would create a sprawling IT giant with multibillion-dollar businesses in many of the primary enterprise technology markets, including storage, information security, IT services, servers and PCs. (For context, Dell-EMC would be larger than Hewlett-Packard Enterprise (post-split), NetApp, Juniper Networks and Symantec combined.) Dell's bold transformational transaction is not coming cheap, however. The company is valuing EMC significantly more richly than it valued itself when it went private two and a half years ago.

Further, Dell's relatively pricey bulking up comes at a time when a number of rival enterprise IT vendors are slimming down. More to the point, several of these competitors are unwinding earlier blockbuster acquisitions they made in hopes of staying more relevant in a shifting IT market. The arrival of the public cloud has siphoned off billions of dollars that once flowed unimpeded to Dell, EMC and other first-generation technology firms. However, IT customers increasingly lack the appetite to buy, install and manage dozens of 'piece parts' and mold them into a cohesive whole. As a result, we can look at the combination of Dell and EMC as essential if the traditional IT model is to survive the onslaught from public cloud providers, most notably Amazon Web Services.

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Tech M&A Gets Grounded in Q3 - What Happened?

Tech M&A Gets Grounded in Q3 - What Happened?
Analyst: Brenon Daly

With both confidence and currency still in strong supply in early summer, it was business as usual for the tech industry's dealmakers at the start of the just-completed third quarter. Corporate acquirers and private equity (PE) firms continued to put up sizable prints early in Q3, keeping 2015 on track for the highest level of M&A spending in 15 years. Everything seemed to be in place for the record romp. And then, about halfway through the quarter, everything got a bit more uncertain as black swans appeared in the summer skies.

Tech acquirers' confidence eroded unmistakably in mid-August as equity markets around the world got routed, with some indexes tumbling hundreds of points in a single session. As the economic outlook dimmed around the globe, valuations for buyers and their holdings dropped as well. If the stock market uncertainty didn't knock buyers out of the tech M&A market entirely, it at least caused them to scale back their acquisitions. Just seven of Q3's largest 20 deals came after the mid-August turmoil, according to 451 Research's M&A KnowledgeBase. Spending in the back half of the quarter dropped 20% compared with the first half.
 
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Where does the tech M&A market go from here?

Analyst: Brenon Daly

In both August 2015 and August 2011, concerns about slowing global economies knocked stock markets around the world into a tailspin, while also ratcheting up volatility. Intuitively, we would assume that both conditions, which introduce more variance and uncertainty, would make it more difficult to do deals. But is that actually the case? And if so, what can the whipsawing markets from four years ago tell us about how M&A activity might play out for the rest of 2015?
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HostingCon 2015 looks to the industry's past, future

HostingCon 2015 looks to the industry's past, future
Analysts: Liam Eagle, Al Sadowski 

HostingCon 2015, the 11th instance of an annual event that is a focal point for the community around the Web and application hosting business, took place in San Diego in late July, gathering hosting service providers and technology vendors from around the US and beyond. HostingCon looked to the hosting industry's future with a session program that touched on new technologies, modes of service delivery and go-to-market strategies, as well as the evolving influence of public policy. Its keynote looked to the industry's past, with a presentation by former SoftLayer CEO Lance Crosby, who detailed the story of the hosting company he ultimately sold to IBM for $2.2bn.

According to organizers, the event grew slightly from the previous year, attracting just more than 1,100 attendees (or 1,800 including exhibitors). 451 Research participated in the event as attendees, exhibitors and speakers, with our analysts moderating and participating in four separate sessions.
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