EMC being acquired by Dell, Inc. for $67 billion.  I didn’t see this coming.  Just last week at AWS #re:Invent I was convinced this was not going to happen.   This deal (if it closes) will be seen as the flashpoint that signals the end of the client/server era and the beginning of the cloud/mobile/social computing industry.

Today, Dell announced it is acquiring EMC for approximately $67B with EMC shareholders getting $33.15 per share comprised of $24.05 in cash cash plus $9.10 per share in the form of a VMware tracking stock worth approximately $18B. Post-transaction, Dell/Silver Lake/MSD Partners will own approximately 40 percent of VMware Inc.’s outstanding stock.  Dell will control the voting shares. The deal is not closed yet.

EMC reportedly negotiated a “go shop” provision with a reduced breakup fee if EMC sells to another bidder. There’s also a collar on the deal that protects both parties from large fluctuations in EMC’s stock price. Given the premium EMC is receiving (about 33 percent since its October 2, 2015 closing price), it’s unlikely other suitors will come to the table, although Cisco Systems, Inc. is one company that keeps coming up as possible acquirer.

According to Wikibon analysts’ comments this morning, this deal underscores the broader move toward the public cloud and the impact of open source in challenging traditional enterprise lock-in models. Linux running storage and apps and the corresponding ecosystems, combined with the ascendency of new data storage models running in the cloud are creating “hard times in hardware,” according to Wikibon Chief Analyst David Vellante. The industry structure is shifting toward organizations that are leveraging an increasingly capable “digital matrix” that obviates the underlyling infrastructure. EMC is increasingly under pressure from this transition. Its CEO, Joe Tucci, is fond of invoking the “waves of change” analogy in which some companies don’t make it through subsequent transitions. The waves appear to be too gnarly for EMC to go it alone.

According to Wikibon Co-Founder David Floyer (@dfloyer), “this seems a great deal for Silver Lake, and a lousy deal for EMC shareholders; EMC would be better off divesting VMware and make more money than letting Silver Lake do it.” Floyer agrees that VMware is the crown jewel; all the other parts of the combined company “will be weighing VMware down with specials to try to differentiate themselves. A disaster for VMware”.  Other analysts like Stu Miniman (@Stu) think culture will be an issue both in terms of people and products.  “Culture will be a challenge. The reports are that VMware ownership will remain with the Dell/EMC combined company although some additional ownership may be sold off to help finance this deal,” he said.

One interesting component will be the VCE and Cisco dynamic.  Dell and EMC have said that the VCE partnership will remain intact. About 20% of Cisco’s Unified Computing business comes from VCE or about $200 million. So if Dell leaves the business alone, it is walking away from $200 million in revenue synergies, which would be hard to believe.

This marks the biggest buyout in technology industry history.  The list of mega buyouts look like this:

Dell – EMC (2015): $67 Billion
Hewlett-Packard Co. – Compaq Computer Corp. (2001): $25 billion
Facebook, Inc. – WhatsApp (2014): $19 billion
HP – EDS (2008): $13.9 billion
Symantec Corp. – Veritas Software Corp. (2004): $13.5 billion
Google – Motorola Mobility(2011): $12.5 billion
Oracle – PeopleSoft, Inc. (2005): $10.3 billion
HP – Autonomy Inc. (2011): $10.3 billion
Compaq – Digital Equipment Corp (1998): $9.6 billion
Microsoft – Skype Communications, S.à r.l (2011): $8.5 billion
Oracle – BEA Systems, Inc. (2008): $8.5 billion
Oracle – Sun Microsystems, Inc. (2010): $7.4 billion
Microsoft – Nokia Oyj (2013): $7.2 billion

The big takeaway from the conversations this morning is that this marks the end of the client/server era.

Jerry Chen of Greylock Partners posted this morning in the CrowdChat (transcript below), “The second order effects of #Dell/EMC will be interesting. Namely, what do HP, Oracle, and Cisco do? Do they buy someone? Does anyone buy NetApp? AWS & Azure looking smarter and smarter.”  There are so many questions around this deal.  Read the crowd chat transcript below for some amazing insights.

Crowdsourced Commentary via CrowdChat

SiliconANGLE and Wikibon took to the “virtual streets” to hear from the crowd of industry influencers.  There is an open CrowdChat which in realtime created this insight “in the moment.” Chat and stored conversations are below.

Cloud Game is Smoking Hot

Last week at #AWS #re:Invent Stu Miniman, Brian Gracely and I analyzed why we think cloud is the main factor forcing Dell to buy EMC. Amazon is emerging as the one to beat in all areas of the cloud industry because, as Gracely noted, “All the rules for the past 20 years are going away, and Amazon is redefining them.” He sees a radical change ahead from the old guard and feels Amazon is changing customer expectations. “If you don’t get something up in a minute or even five minutes, you are decimated as a company.”

I am eating my words (at 5:19 in this video) from ‪#‎AWS‬ ‪#‎Reinvent‬ on the Dell EMC story. Incredible huge deal size. Ambitious. This will certainly make our theCube event at Dell World fun.

AWS Leader Andy Jassy Explains Why AWS is Winning – @theCUBE #Reinvent

When asked about AWS disrupting the industry, Jassy replied, “We are not trying to be disruptive; we are trying to give the customers what they want.” He explained that currently there are 50 services and many features available through  AWS, and the technology infrastructure platform offers customers the ability to build upon it.

Jassy gives credit to the leadership at Amazon for its customer-centric culture. “We want to give businesses what they need to be successful, and our leadership is good at executing on customer feedback,” he said.

“When we started AWS, we saw a strong tech company that needed to move more quickly to meet the demand,” Jassy stated. However, that company never internalized how constrained developers were over the years and how difficult it was for enterprises to move quickly, which he believes restrained innovation. “When you support them, it opens up all the ideas they can be successful.”