Dell Inc.’s acquisition of EMC Corp. (EMC) for $67 billion, underlines the attempt by legacy technology companies to stay relevant in an increasingly competitive environment, according to Fitch Ratings. It says the deal will alter the competitive landscape in the technology space, creating increased competition for tech companies with significant complete enterprise computing services like Hewlett-Packard Enterprises (HPE), IBM, and Oracle.

The acquisition will result in the world’s largest integrated information technology (IT) provider by revenues and will strengthen Dell’s storage and virtualization offerings, providing higher profit margin growth opportunities.

Among other benefits Fitch sees, the acquisition adds significant scale in storage for enterprise customers as Dell continues to pivot away from roots in personal computers. Dell expects revenue synergies from the ability to offer converged infrastructure (combined storage, networking, and servers) as a result of the combination.

Fitch does not believe the deal in and of itself addresses top line pressures facing each company as the market shifts to cloud-based software and standardized solutions from legacy on-premise hardware products.

The acquisition should strengthen Dell’s competitive position among leading IT providers, including IBM and HPE, although at a time when HPE is separating from its lower growth PC and printing units to sharpen focus on enterprise markets.

Dell’s scale already provides efficiencies in procurement of memory, hard disc drives and other hardware components and the EMC buy bolsters that, Fitch says.

The 60-day “go-shop” period, – if EMC gets and entertains a better offer during a certain timeframe, the company will pay Dell substantial penalties- but ita could spur large technology rivals without significant storage capabilities, including Cisco Systems to make a bid.

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