Dell rattled the enterprise IT market on Monday when it announced its plans to acquire storage giant EMC for a staggering $67 billion. Following the announcement, several questions surfaced, including the following.
Where is the cloud?
If Dell goes ahead with its plans, it would become one of the largest IT companies in the world, right behind Microsoft and IBM. Dell, however, still is a little behind in offering the emerging and rapidly-expanding cloud services sector. Hewlett-Packard, IBM, and Oracle are all focusing on developing cloud offerings – all with numerous levels of success. Dell hasn’t focused on this as of yet, and simply acquiring EMC would not change the facts. How much this matters to Dell, remains to be an open question.
Glenn O’Donnell, who is the research director at Forrester, says “This deal makes Dell a far stronger player in the traditional sense of IT technology vendors. The problem is, the future belongs to non-traditional players.”
Majority of large organizations are utilizing some type of combination of private and public clouds, and Dell must prove its grounds by showing that it can become the go-to provider for those companies. This, however, doesn’t mean that it has to operate its own cloud and go head to head with Microsoft Azure or Amazon Web Services.
What would become of VMware-Cisco-EMC partnership?
Six years ago, EMC, Cisco, and VMware joined hands to develop a company named VCE. This company sells converged infrastructure systems that unite computer, storage, and networks in pre-configured blocks.
EMC CEO Joe Tucci, answering this question, affirmed that this partnership would continue: “Our VCE business, when connected to Dell’s products and services, will grow faster and have a much larger impact on the industry than either one of us could individually.”
The EMC deal would in fact provide greater opportunities for Dell to sell more servers and network equipment for those converged systems. O’Donnell was pessimistic, though; highlighting the fact that Cisco had already begun to scale back its investment while Michael Dell would also reduce involvement of EMC.
According to him, Dell has the chance to develop a truly unified alternative.
What does the Dell-EMC Merger hold for rivals?
Even if VCE efforts continue, Cisco is eyeing at a different landscape altogether to move forward, and this perspective will set off an internal discussion regarding its strategy for the long-term.
“I don’t see anything imminent, but they need to think hard about who they partner with and about potential mergers moving forward,” says the chief research officer at IDC, Del Prete.
He further added, “Converged is the order of the day, which means Cisco has to think about how they build those systems and who they partner with, because EMC is not the same company it was last night.”
As far as Hewlett-Packard is concerned, it would have easily dwarfed the new merger, but it split into two different companies on November 1st, with HP Enterprise being the smaller entity.
This deal is going to put immense pressure on HP to prove that it is capable of growing its business.
“If this goes through, HP is totally hosed,” said Rob Enderle, an analyst who is highly critical of HP’s split, “Dell would appear as a far more complete vendor than HP, and with HP’s crippling layoffs its customers will quickly be looking for enterprise-class alternatives.”
Would there be any layoffs following the Dell-EMC merger?
Some job cuts are inevitable; however, not as many as some people expect with a merger of this size.
“There are certainly some cost synergies, we’re not going to tell you there aren’t, but there are other companies in the industry that are much better at reducing headcount,” said Michael Dell, with a hint of sarcasm.
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