On February 23, 2016, the US Federal Trade Commission (FTC) cleared the way for Dell’s acquisition of EMC to go ahead. Now all that’s left for the acquisition to move forward is the shareholder vote.
Assuming that the vote is in favor of the acquisition, Neuralytix forecasts some very positive outcomes for the “new” Dell (for the purposes of this document, we will refer to the “new” Dell as Dell/EMC).
Neuralytix believes Dell/EMC will dramatically change the way IT customers will think of its vendors. For a decade now, IT vendors have tried to move beyond just selling product, to selling solutions. IBM is probably the most successful at this, and this is a high bar to which Dell/EMC must reach.Dell/EMC will have the most complete IT portfolio in the market:
- Backup and Archiving
- Big Data and Analytics
- Cloud Platforms for the Enterprise (eg. Virtustream)
- Content Management
- Converged Infrastructure (CI)
- End user computing
- Governance, Risk and Compliance
- Hyper-Converged Infrastructure (HCI)
- Information Governance
- Networking
- Security
- Servers
- Storage
- And, through EMC’s majority ownership of VMware, server, networking and datacenter virtualization and management solutions.
Both companies bring with it a go-to-market channel and strong services organizations.
While there will be some overlap in solutions, for the most part, the marriage of Dell and EMC will be completely synergistic. Areas of overlap include backup and recovery (Dell’s Quest software, and EMC’s Networker), as well as their respective storage portfolios.
Where Neuralytix believes the most synergy will be found, and where customers will most quickly benefit is in the area of CI. Neuralytix posits that EMC’s VCE division, the joint venture (JV) between EMC, Cisco and VMware will lead to a VDE solution, one where Cisco, as the server and network provider will be replaced by Dell products.
This change is particularly significant. The development of VDE software, hardware integration, and data services, along with its support and services will now come under a single company (we are including VMware as essentially a Dell/EMC company), rather than distributed across two. Neuralytix expects EMC customers, for the most part, to remain loyal to EMC post-merger. And, with the general acceptance that servers are now highly commoditized, and the benefits offered by CI – predictability of performance, repeatability of deployment, and scalability in terms of performance and capacity – augmented by the tight integration of server, network, storage, hypervisor and management software, Neuralytix believes that many EMC customers will take advantage of Dell/EMC to migrate to CI, and particularly VDE CI.
Neuralytix believes that Dell/EMC will be better positioned to take on IBM’s services driven and business focused solutions. This will take some time, as Dell/EMC will need to develop solutions that touch everything from the infrastructure through to the applications and even the user experience.
Regretfully, Neuralytix believes that HP will be negatively impacted as a result of Dell/EMC as the completeness of portfolio, and VDE provide a very compelling reason for customers to source their IT infrastructure from a single source.
Cisco is not expected to be greatly effected as it has intelligently developed strong relationships with other storage vendors, and will be able to offer UCS based CI solutions through these partnerships, such as NetApp.
From a storage perspective, Neuralytix believes that initially, the Dell/EMC share of the market will extend EMC’s dominance, but over the next 12 to 18 months, Neuralytix expects that Dell/EMC may give up as much as 5% in market share to start-ups, which will (along with their assertion of their specific area of superiority) exploit the acquisition to suggest to its prospective customers of the uncertainty of the future.
One area in question, is what assets Dell/EMC may divest. At this point, it is far too early to speculate, or even suggest that Dell/EMC may shed any asset.
Overall, Neuralytix is very excited about the prospects that Dell/EMC will bring. Customers should also see this as very positive. As Neuralytix continues to vehemently share with our Clients, IT stands for Information Technology, not infrastructure technology. So the easier the deployment of infrastructure either on-premise or in the Cloud will allow customers to focus on the competitive advantage and innovation that they can generate from IT.