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What Does Potential VMware, Dell Merger Mean for Healthcare Cloud?

The potential acquisition of Dell by VMware could help Dell embrace healthcare cloud and edge computing as IT infrastructure technology evolves.

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Source: Thinkstock

By Elizabeth O'Dowd

- VMware is poised to buy Dell in a reverse merger in response to the growing demand of cloud-based enterprise IT infrastructure. Dell and VMware both have their hands in healthcare IT, so what could this potential merger mean for health IT infrastructure and healthcare cloud?

Dell already owns VMware as part of its 2015 acquisition of EMC. Dell originally gained 80 percent ownership of VMware when it bought EMC for $67 million.

In this reverse merger, VMware would buy its parent company Dell so Dell can be traded publicly without going through a formal listing, according to CNBC. This is one of the biggest tech industry deals in history and the deal will help Dell return to the public market after going private in 2013, the news source added.

“If VMware were to buy Dell, VMware would issue shares to Michael Dell and Silver Lake, the private owners of Dell,” reported CNBC. “The owners could then sell shares on the public market as a way of monetizing their investment in Dell.”

A decision on this merger is expected to take place within the next month.

The main driver of this deal is the demand for cloud-based enterprise tools. VMware focuses on virtual machines and bringing IT infrastructure to the cloud, while Dell focuses more on hardware. This distinction could prevent Dell from being as profitable in the future.

Dell has released several tools over the past several years including network management solutions and clinical archiving systems. While these tools helped transform health IT infrastructure, Dell is primarily known as a hardware and PC vendor.

Dell was involved with many of the announcements from VMworld 2017, with Dell Chairman and CEO Michael Dell featured significantly in the keynote address.

Many of VMware’s announcements focused on edge-computing and decentralizing data silos and cloud-based tools. The recognition of these trends showed the evolution of enterprise IT initiatives to more flexible solutions.

VMware’s more modern business model is to virtualize and help organizations embrace the efficiencies that advancing technology offers, VMware CEO Pat Gelsinger explained at VMworld.

“It’s hard to believe that our expectations have changed so radically in such a short period of time,” explained Gelsinger. “A one-year-old can pick up a smartphone, touch the screen and expect things to happen. Tech is leaving the nest of tech. Every major vertical is having their breakout moments. In every case we’re seeing tech driven models structure entire industries.”

VMware is used by many vendors to produce virtual machines and other cloud-based tools. Numerous healthcare organizations already use VMware tools for virtualization, cloud computing, and hyper-convergence.

The potential merger will give VMware more control over Dell solutions, which will allow Dell tools to be more flexible and compatible with other future cloud-based tools.

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