Yahoo Finance 
The biggest tech deal of all time won't stop Amazon — but will hurt startups
(Dell)
EMC CEO Joe Tucci (left) shakes hands with Dell CEO and founder Michael Dell (right)
So Dell has decided to orchestrate the biggest tech acquisition of all time, paying $67 billion to buy EMC, mostly via borrowed cash, and gaining control over EMC subsidiary VMware.
This combined company will be a force in the $2 trillion market that sells technology to businesses.
Unfortunately, businesses are sick of buying technology and installing it themselves, says one of VMware's earliest employees, Steve Herrod, who is now a VC at General Catalyst Partners.
That's why Amazon's cloud computing business is doing so well.
Companies like Capital One, GE, Ticketmaster and Yamaha America are increasingly unplugging some or all of their their data centers which means they are not buying computer servers, network and storage.
They are renting all of this stuff from Amazon
(Mike Segar/REUTERS)
Amazon CEO Jeff Bezos
"For the relatively shrinking pie of the data center, the combined company will be one of the top players, for sure. But I think you are doing all this stuff and missing cloud and this [merger] does not provide a real threat to that," he says.
"Amazon is just a monster who is going to continue to grow. Even Microsoft is doing quite well with Azure. I don't think this [Dell/EMC] combined entity has what either of them have," he says.
On top of that, Dell can't replace a shrinking catalog of enterprises customers by selling its gear to the cloud computing players. Amazon (like all the big internet cloud companies) tends to build its own low-cost equipment, not buy the kind of high-end expensive stuff that EMC is known for and Dell wants to sell.
There's a threat to the crown jewel of EMC as well: VMware
(Steve Herrod/LinkedIn)
Steve Herrod, Managing Director at General Catalyst Partners
Harrod joined VMware in 2001 and was there when EMC bought it in 2003. He says the reason why VMware has been successful under EMC was that VMware wasn't forced to favor EMC's hardware other other vendors.
But with the huge amount of debt Dell will have to service for this deal, VMware employees are worried those days are over.
"I think there’s nervousness, and rightfully so, on the part of VMware," he said. "When VMware chose to be acquired by EMC, a big promise was that the sales team wouldn’t favor EMC storage and would be kept independent on all fronts. That's harder to justify. There's no question they are going to squeeze more cost and revenue out of the combined entity."
This deal isn't great for startups
(Business Insider)
Microsoft CEO Satya Nadella
EMC is gone, VMware is distracted, Dell is taking on a new $40 to $50 billion in debt, and none of them will be shopping for startups for a while.
On top of that, Pure Storage's awful IPO has scared late-stage startups away from going public for now.
"EMC, VMware and Dell were active buyers. This is going to put that on hold for a while. Cisco, HP and Symantec are all in a holding pattern," he says. "The trickle down affect is that startups will either go it alone or they'll end up in non-traditional places."
For instance, one place they might wind up is Microsoft who has been "getting very, very active" with acquisitions again, he says, "as is Amazon, SoftBank and some of the Chinese companies."
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