EMC-Dell merger will require some unpopular decisions

Michael Dell likes to make big calls. The decision to buy back his own company from those pesky shareholders in 2013 was ballsy enough. As he put it at the time: "Go big or go home, baby."

But the more recent purchase of data storage kingpins, EMC, for $67 billion – the biggest tech acquisition of all time – shows just how much confidence he has now that he’s back in the driving seat at the firm he founded in a university dorm in 1987.

In short, he’s never been one to shy away from tough decisions, which is going to come in handy once the merger is finalised later this year (expected in October).

This quality is something EMC products and marketing president Jeremy Burton clearly appreciates in his new Number One.

Speaking to The Irish Times at the EMC World Conference 2016 in Las Vegas, Burton acknowledged some unpopular decisions would need to be made if a merger of this scale is to succeed.

“You’ve got a lot of people working in both companies,” he says. “We have to try and identify who the key people are in each functional area and who are going to take the lead on resolving big issues. We both have staff doing similar things in areas like sales, marketing, finance, HR etc.”

There is significant overlap in some departments and, media reports from January confirmed EMC’s intention to let some staff go as part of an $850 million cost-cutting measure being implemented at the Massachusetts-based firm.

“Consolidating two organisations of this scale means decomposing problems in every department and figuring out what the core challenges are. We have to be functional in our approach: identify the challenges and resolve them.

“At some point someone has to make decisions that aren’t popular. But that’s all up to Michael [Dell] now. And he’s a guy who likes to make big decisions.”

Dell and EMC’s products, services and target markets have, thus far, been pretty different (one of the reasons driving the decision to merge in the first place). While EMC has focused on large enterprise customers, Dell has, until relatively recently, been seen as a mid-market, consumer-focused tech provider.

Had it been different, Burton believes the merger would be less straightforward.

“The tech we build is like our baby, and no one likes to be told their baby is ugly.”

If there had been too many issues surrounding the products and services each provide, Burton believes the merger might not have been possible.

“We’re fortunate in that respect, as it can be a very sensitive issue,” he says.

“As it stands, we sell in one market, Dell in another. And if that’s the value of the two companies, we have to protect that in each. The question is, can we sell to both big and mid markets at the same time.”

Once a united sales pitch is agreed upon, significant economies of scale should be enjoyed, particularly by EMC.

"Dell buys more Intel processors than anyone. It also buys more SSDs than anyone. Dell's supply chain, infrastructure, maintenance and repairs, will all be available to us now too."

Jobs

EMC employ about 3,000 people in Ireland, mainly in Cork, while Dell has about 2,500 staff in Limerick, Dublin and also Cork.

There has been no solid indication from either company as to the security of those jobs, post merger.

However, Burton made some positive noises. “Cork is an offshore site for us,” he says.

“Sure, it is cost effective to locate in Ireland, but we’ve been there for a long time and many of our people have established roots. So there are no plans to leave anytime soon.”

‘Synergy’ may be the most overused word in tech today but it does accurately describe why the Dell - EMC merger should succeed.

EMC’s dominance in the storage device sector, for example, is a perfect fit with Dell’s strong position in servers - the machines running corporate computing.

Both have enough in common to work together but, concurrently, are different enough to keep out of each other’s way.

Burton believes the two organisations also agree on the core principles driving the merger.

“There may be disagreements day to day but everyone is pretty much on the same page about why we’re doing this,” he says.

EMC World 2016 took place this week in Las Vegas.