Back when we had more computers and laptops than smartphones and tablets, Dell's mastery at direct-sales marketing and its expertise in supply chain and inventory management changed the electronics industry.
Now, time has taken its toll and a changing competitive environment means one of the high-tech industry's stalwarts must also adopt. Dell's acquisition of EMC may help. Earlier this month, Dell signed a definitive agreement to acquire EMC, while maintaining VMware as a publicly traded company.
The $67 billion transaction gives Dell more access to “the extremely attractive high-growth areas of the $2 trillion IT market with complementary product and solutions portfolios, sales teams and R&D investment strategies,” according to a Dell statement. Additionally, the deal is aimed at building capabilities in fast-growing market segments such as digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and security, the company said.
How this plays out from here is still a best guess. Some speculate that the deal will widen Dell’s play into technology services in industries such as healthcare, education and the military, where cloud-based capabilities are increasingly becoming more important than the efficiently moving products. Others argue that the Dell-EMC deal will not deliver on proposed profit plans or create the competitive advantages Dell executives hope primarily because of its commodity hardware focus. And there are those that say we may see a wave of tech mergers and acquisitions, with big companies using their cash piles to keep their seat at a table where other players are changing in a more steady stream, while other pundits think the deal is the “classic reaction to disruptive technology” created by competitors.
What's certain is that deals like this mark another inflection point, not just for Dell but also for other longtime technology veterans. The compelling supply chain forces that drove many technology companies only a couple decades ago–trimming inventory levels, strengthening forecasting abilities, building products to order and lowering costs–seem to be less compelling as different market dynamics and consumer preferences dictate new rules of the game.
Undeniably, supply chain excellence–and all the sourcing, planning and manufacturing plans that support this–is still a noble aim, but the context of the market has changed. Supply chain models that worked 10,15, or 20 years ago–and were considered game-changers in their day–have to evolve into something else if companies expect to survive the next phase of whatever comes next.
How well Dell can integrate EMC and use its longstanding supply chain strength to shape its forward-looking business plan will be something others in the industry will want to keep an eye on. It's not too far-fetched to think one day your company may be looking to do the same.