Yes, says Michael Dell, even a $67B takeover is a risk worth taking
The planned megamerger with EMC shows Dell's willingness to make bold moves in an era when old-guard computing companies are scrambling to adapt.
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"If you want to innovate and do new things, you have to embrace risk," says CEO Michael Dell, speaking at Web Summit 2015.
DUBLIN -- Embracing risk worked out well for Michael Dell when he founded a computer company in his college dorm at age 19 with $1,000 and grew it into a PC era Goliath.
Now Dell is making a gamble on a much grander scale with his company's planned $67 billion acquisition of storage technology company EMC, likely the biggest one ever in the technology industry, and he's fine with that.
"I'm excited and happy to take on risk," Dell, CEO of the company that bears his name, said Tuesday at the Web Summit tech conference here. "One problem larger companies have from the perspective of an entrepreneur is they think of risk as something to avoid. I understand that. But if you want to innovate and do new things, you have to embrace risk."
Not so long ago, his Round Rock, Texas-based company found itself forced to do new things. A slumping PC industry and the mobile-device revolution, driven by consumers' changing tastes in high-tech gadgetry, had sucked the wind out of its sails. In response, Dell took his company private two years ago to try to restore its financial fortunes out of the glare of public markets.
The spotlight is back on with the proposal to buy EMC and its VMWare software subsidiary, whose so-called virtualization software lets companies run multiple computer systems on a single computer server.
Dell has had a good run in recent quarters selling servers to buyers at big businesses, but new realities continue to intrude. Customers once ran their own in-house servers to handle things like bookkeeping, inventory management, customer relations and email. Now they can just pay others to handle most of the dirty work through cloud-computing options like Amazon Web Services, Microsoft Azure, Google Apps and Salesforce.com.
Bold moves like a multibillion-dollar acquisition offer one possible route toward a brighter horizon. Dell's bid to get larger is diametrically opposed to that of rival Hewlett-Packard, which on Monday completed a split into a business-focused operation and a consumer-focused HP with printers and PCs.
Dell is trying to adjust by helping customers make existing computing equipment more efficient and using cost savings to expand into new domains such as the Internet of Things, the burgeoning world of billions of interconnected computing devices, robots, drones and artificial intelligence. Corporate computing is moving "out of the realm of just automating the old processes and into fundamentally changing and reinventing businesses," Michael Dell said.
His company also must reckon with the steadily increasing importance of smartphones that, although not making PCs extinct, have at least diverted consumers' spending on personal technology and software makers' focus on the kinds of apps to create.
Dell hasn't had much success trying to sell new-era mobile devices powered by Google's Android software. PCs, though, remain an important business for the company, with 11 consecutive quarters of increasing market share, Dell said.
"There are about 1.8 billion PCs in the world. About 600 million of them are more than four years old. Our simple job is to create one that's better than the one we sold you five years ago," Dell said "It's actually not that difficult to do."