This is significant because while other large technology companies (such as HP and IBM) have announced divestitures or downsizing in this market, Dell and EMC together will create a mega-technology company.
Since Dell went private two years ago, they have at least been able to maintain their market share in both their respective server and PC businesses, but have struggled to grow within the large enterprise and higher-margin markets. EMC has long been a leader in enterprise storage solutions, but has been challenged to keep pace with new trends and lower data center storage costs in this rapidly changing and dynamic market. IHS believes that together as a single entity, Dell and EMC will have one of the most comprehensive and unified portfolios, which should give them additional reach in larger business opportunities they haven't previously had access to. This will allow them to better compete against IBM, HP, and Cisco in the growing trend of unified IT solutions.
On paper, IHS sees the deal as the best path forward for both companies. Financial success, of course, remains an open question. Both companies are individually considerable in size, and both already have extensive product portfolios. Integrating these portfolios will likely require change and a certain amount of scaling back into any duplication of effort. IHS doesn't believe this will initially drive divestment in Dell's low-margin server or PC business, but if, at the end of the road, the low-margin business becomes a financial burden, then it's possible.
The immediate challenge, of course, will be integrating the two companies, maintaining cash flow to service the debt they will accumulate, while remaining flexible enough to react and adapt to what this market, as a leading mega-technology provider, demands. Being a private company like Dell will allow for greater flexibility, as they won't have to disclose information to or answer to shareholders, but the bigger the ship, the harder it is to change course.

Author: Craig Stice, Computer and Server Electronics Analyst for IHS Inc.