Combining EMC and Dell to Unlock More Innovation

In an onstage interview at Structure 2015, Sun Microsystems co-founder Vinod Khosla said that “EMC and Dell merging is a really good financial move for Michael, but it will set back innovation and distract from innovation.”

Vinod is a smart venture capitalist and I don’t doubt his ability to recognize innovation in startups, but his view on our ability to innovate at scale is not entirely accurate.

EMC, and going forward Dell+EMC, will continue to leverage a dual track innovation model where we internally invest in incremental and disruptive technologies AND aggressively seed, cultivate, acquire and scale disruptive startups. This model has worked extremely well given that we are generally viewed as one of the more innovative technology companies even though we compete with companies many times our size.

Dell+EMC will actually remove one of the disadvantages EMC has had versus startups, the artificial quarterly cadence with short term expectations that dominate public company culture. Under a privately-controlled structure, the combined company would have more time to execute on innovation and more scale in R&D.   It would also allow for the reassignment of $3.5B on average which currently goes to share buybacks and dividends each year.

What matters most in this debate will be the results and we are quite proud of the outcomes of our innovation so far. We are the leader in storage, virtualization and data protection. We are the market segment leader in all flash arrays. We are the creator and leader of the converged infrastructure segment.

We are generally viewed as one of the most successful M&A engines of all time and we grow our acquisitions well. Most of our inorganic transactions became leaders in technology and innovation after we acquired them.

We also spend billions of dollars each year on R&D internally to keep the acquired technologies in the lead and to invent new products and technology where we see gaps (ex./ CloudPools, Atmos, ViPR, Elastic Cloud Storage (ECS), Vblocks, most of Cloud Foundry, RackHD, and CoprHD).

While our innovation engine is more complex and multifaceted than a single startup, it results in an industry leading flow of innovation that we think will create enormous strength within the combined Dell+EMC.

I am glad that leading VCs are watching EMC as we benefit tremendously from many channels of innovation. As a roughly $80B entity, Dell+EMC will need more than just one source and method of innovation. Our model provides exactly that.

There will never be an end to the opportunities for organic growth and strategic external investment as long as innovation remains core to being successful in business and IT.

Disclosure Regarding Forward Looking Statements

This communication contains forward-looking information about EMC Corporation and the proposed transaction that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) the failure to obtain the approval of EMC shareholders in connection with the proposed transaction; (ii) the failure to consummate or delay in consummating the proposed transaction for other reasons; (iii) the risk that a condition to closing of the proposed transaction may not be satisfied or that required financing for the proposed transaction may not be available or may be delayed; (iv) the risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained, or is obtained subject to conditions that are not anticipated; (v) risk as to the trading price of Class V Common Stock to be issued by Denali Holding Inc. in the proposed transaction relative to the trading price of shares of VMware, Inc.’s common stock; (vi) the effect of the proposed transaction on VMware’s business and operating results and impact on the trading price of shares of Class V Common Stock of Denali Holding Inc. and shares of VMware common stock; (vii) the diversion of management time on transaction-related issues; (viii) adverse changes in general economic or market conditions; (ix) delays or reductions in information technology spending; (x) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (xi) competitive factors, including but not limited to pricing pressures and new product introductions; (xii) component and product quality and availability; (xiii) fluctuations in VMware’s operating results and risks associated with trading of VMware common stock; (xiv) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (xv) the ability to attract and retain highly qualified employees; (xvi) insufficient, excess or obsolete inventory; (xvii) fluctuating currency exchange rates; (xiii) threats and other disruptions to our secure data centers or networks; (xix) our ability to protect our proprietary technology; (xx) war or acts of terrorism; and (xxi) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission (the “SEC”). Except to the extent otherwise required by federal securities laws, EMC disclaims any obligation to update any such forward-looking statements after the date of this communication.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.  This communication is being made in respect of the proposed business combination transaction between EMC Corporation and Denali Holding Inc.  The proposed transaction will be submitted to the shareholders of EMC for their consideration. In connection with the issuance of Class V Common Stock of Denali Holding Inc. in the proposed transaction, Denali Holding Inc. will file with the SEC a Registration Statement on Form S-4 that will include a preliminary proxy statement/prospectus regarding the proposed transaction and each of Denali Holding Inc. and EMC Corporation plans to file with the SEC other documents regarding the proposed transaction.  After the registration statement has been declared effective by the SEC, a definitive proxy statement/prospectus will be mailed to each EMC shareholder entitled to vote at the special meeting in connection with the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS RELATING TO THE TRANSACTION FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.  Investors may obtain copies of the proxy statement/prospectus (when available) and all other documents filed with the SEC regarding the proposed transaction, free of charge, at the SEC’s website ( Investors may also obtain these documents, free of charge, from EMC’s website ( under the link “Investor Relations” and then under the tab “Financials” then “SEC Filings” or by directing a request to: EMC Corporation, 176 South Street, Hopkinton, Massachusetts, Attn: Investor Relations, 866-362-6973. 

Participants in the Solicitation

EMC Corporation and its directors, executive officers and other members of management and employees may be deemed to be “participants” in the solicitation of proxies from EMC shareholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of EMC shareholders in connection with the proposed transaction and a description of their direct and indirect interest, by security holdings or otherwise, will be set forth in the proxy statement/prospectus filed with the SEC in connection with the proposed transaction. You can find information about EMC’s executive officers and directors in its definitive proxy statement filed with the SEC on March 2, 2015 and in its Annual Report on Form 10-K filed with the SEC on February 27, 2015. You can also obtain free copies of these documents from EMC using the contact information above.

About the Author: John Roese