When the news broke on Thanksgiving Monday that #Dell was buying #EMC, with the merger being touted as one of the largest in tech history, I had flashbacks to 2002 when #HP announced it would be buying #Compaq for $25 billion USD.
At the time, my colleagues and I at Computing Canada and ITBusiness.ca put a lot of horsepower into coverage from various angles as HP touted the deal as a platform to become a services powerhouse in the same way #IBM had moved away from just being a purveyor of mainframes and PCs.
The synergies that HP hoped to harness by acquiring a rival were never realized, and one can’t help but wonder if the combination of Dell and EMC might meet a similar fate. However, as Dave Pearson, research manager for enterprise storage and networking at IDC Canada said, there are key differences between this mega-merger and HP swallowing up Compaq.
“HP and Compaq immediately had a lot of product lines in competition with each other,” he said, while Dell and EMC’s overlap is less pronounced and is primarily in the enterprise storage arena. “Dell doesn’t have the same breadth of storage as EMC.” This means there will be less product rationalization, and more broadly, there are lines of business that Dell and EMC both participate in, but with different customers and at different levels of IT infrastructure.
Outside of mid-range data storage, said Pearson, each are clear leaders in different areas, and it doesn’t look as though Dell will subsume the EMC brand. In addition, and the EMC Federation has worked well for EMC for years, so Dell will likely be hands-off in that regard, while being sensitive to EMC’s existing relationship with VMware.
“From a technology standpoint having #VMware majority-owned by a server company would be the most painful thing for VMware’s partners to accept,” said Pearson. “If the message changes to ‘VMware only really runs on Dell,’ that could poison the well for VMWare’s partners.”
Pearson said the deal will be a boon to Dell’s network, converged and server business, and the combined entity will likely enjoy an increased number of accounts overall. “Dell has a better success rate with integrating acquisitions,” he said. And because of its semi-private nature and leadership, “Dell is in a better position to make hay of this and not be scrutinized as hard as HP.”
The irony is that HP has decided that it needs to be smaller and more agile, while Dell believes it can only compete by getting larger. On the other hand, going private has led to more flexibility for Dell. When it launched Datacenter Scalable Solutions in August, Dell executives said being a privately-held company allowed it to work in stealth mode and respond to what is saw as a growing customer segment in an agile manner.
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