With EMC, A More Muscular Dell Could Mean Boost for Startup Scene

News about Dell Computer’s purchase of Massachusetts-based EMC has for the most part honed in on the sheer size of the deal, the largest acquisition ever in the technology industry.

Those on the ground in Austin, TX, say they hope that the deal means a more muscular Dell will translate into a healthier local tech ecosystem as well.

“In the past, Dell’s been essentially a manufacturing company with some innovation,” says Michael Johnson, a principal at Bridgepoint Consulting in Austin. “This move requires them to be an innovation company with some manufacturing. You’ve got to be involved in the holistic ecosystem, in the community, to innovate.”

(For more on the tech side of the deal, see my colleague David Holley’s interview with Infinite io CEO Mark Cree, who worked with both Dell and EMC during his days at Cisco.)

The EMC deal comes two years after founder Michael Dell successfully brought his namesake company private in order to re-pivot corporate strategy away from the distractions of Wall Street. At that time, I spoke to several entrepreneurs and investors who said they hoped the new focus would mean that Austin’s iconic tech company would take a leadership role locally.

In particular, Bob Metcalfe, inventor of the Ethernet and a professor of innovation at the University of Texas at Austin, had said that that was the message he delivered to Michael Dell himself. “I needed his reputation to be as entrepreneur,” he recalled.

Now, Metcalfe says the EMC deal makes sense for Dell since the company is already a big supplier of storage. It’s a “sensible consolidation” in a growing but changing market, he adds.

Steve Guengerich, founder of Appconomy in Austin, says he saw the seeds of Dell’s strategy four years ago, as it was shifting from selling PCs to consumers to providing technology services to big companies. “The company had clearly decided that its way ahead was enterprise computing,” he says.

 

Angela Shah is the editor of Xconomy Texas. She can be reached at ashah@xconomy.com or (214) 793-5763. Follow @angelashah

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