There is a feeding frenzy on the M&A speculation regarding Dell buying EMC. How much will it cost, who is impacted and how big of an impact it will be? Although the speculation is interesting, the 800 lb gorilla in the room is “What’s going on at EMC” to warrant this.
Working in IT sales, I work and compete with EMC and their partner organizations; primarily VCE and VMware and their recently divorced partner, Cisco. Following EMC and VMware at their respective vendor conferences; EMC World and VMworld they have an extremely large and dedicated following. EMC sellers are some of the most aggressive and by extension successful compared to vendors. I personally follow many of their technologist on social media reading their blogs and tweets – I view them as a very formidable competitor and occasional partner (even though I am not EMC’s biggest fan).
Why does a company whose products and partnerships are either #1 or leading in their respective areas desperate to find a company to acquire or possibly merge with them? It was shocking to hear HP’s name mentioned over a year ago. They are an absolute train wreck as we now see. If I was an EMC company officer or board member, I would not want to see my company consumed by the likes of HP. Cisco makes sense but I don’t know how deep the recent divorce and hurt feeling goes. Lenovo doesn’t make sense, nor Hitachi. Fujitsu….well, they have their Oracle relationship and they seem content to with who and what they are? What about Oracle….EMC as a company has its own ego, I don’t think Larry’s ego and EMC’s ego would mesh. Although, Oracle’s storage is abysmal and this would elevate them to the leaders quadrant immediately. Maybe that would give Oracle the needed reason to finally kill off SPARC given its unending failures. How about IBM? Frankly, they have a great storage portfolio, they simply do not have comparable storage sellers to EMC. EMC’s software would fall into IBM’s vast portfolio then either rise to the top or fade into oblivion. I could see this making sense for IBM but don’t know if IBM has the stomach to ingest a company with such a different culture. From Dell’s perspective, an EMC acquisition makes sense. I see them having their most success in the SMB and academic markets then probably state and local governments. At least in the US with corporate America, Dell is not a respected enterprise brand. Buying EMC would give them immediate credibility, access to many customers data centers they are not in today. They would have to decide what to do with their Compellent and EqualLogic products. I would probably keep the EqualLogic product family as it seems to service their low end SMB space, a space that I don’t think EMC cares much about. Sell Compellent to get cash for the investments made as well as to strengthen the books.
From EMC’s perspective, they would be acquired by a company known for inexpensive laptops and decent desktops (How’s that market doing these days?) and reselling Lexmark printers (who makes them now?). Only in the last couple of years do I occasionally hear Compellent’s name being mentioned and it is usually to smaller shops with lots of VMware….let’s say shops that aren’t very sophisticated. Their is still a relationship with Cisco both with EMC to Cisco but also with vBlocks. VMware has their EVO:Rail and Dell has their partnership with Nutanix. Lastly, their is VMware. Here’s the irony of what is going on: Some people want EMC to spin off VMware while others want EMC to keep them to strengthen and shore up the Federation. If the stories are right, Dell would buy EMC then sell off VMware to reclaim much of its acquisition cost.
We will soon see if there is any truth to the rumors about Dell acquiring EMC. if they are true, will this be a repeat of what happened to HP after merging with Compaq (HPQ after all)? They failed to integrate the many technologies and companies over two decades. Some cost a fortune and often the cultures were vastly different. HP is different from both Dell and EMC in that they made one bad M&A decision after another. DEC, Tandem, Compaq, Autonomy, 3PAR, 3COM and Palm (just from memory).
Maybe a Dell acquisition of EMC makes sense but it will take a couple of years to see what products survive and what doesn’t. This of course will be disconcerting to customers who have invested in their respective technologies. IBM was often the source of FUD attacks claiming the end of every one of their businesses as well. It is my contention that is how they have made it to 100+ years. I hope we will hear someday what was really going on at EMC to warrant their ongoing search for a suitor. The last mega merger of a commodity company to a enterprise company didn’t turn out so well: HPQ!
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