One of my colleagues today asked me for my thoughts on the merger of Dell and EMC.  I have to admit from an initial reaction I thought this is crazy.  Then, I took a moment to really think through this and here is what I think:

  • Dell is a privately held company, which gives it the freedom from shareholders and Wall St to reorganize the company in a way that reflects the changing environment in IT industry.  From a financial perspective, cuts and allocations may be made where necessary and even if something is going to cannibalize existing solutions, if its the right thing for the company to do to survive and thrive, then it is easier to do when private.
  • Dell has entered the Enterprise space really with the acquisitions of Equallogic an Compellent.  It has made huge inroads in the enterprise storage space but is still not as mature from a marketing or sales perspective as others, such as EMC.  That said, Dell has a very competitive server platform and a cost effective networking product line.  All important in the software defined everything world we are entering.
  • EMC has been an enterprise giant for the past couple of decades, leading the way with enterprise class storage platforms.  It has a mature sales team and one of the best marketing machines in the industry.  It also has a large customer base and a premier support organization with global reach.  Recently the company has seemed confused as to what it wants to sell.  It has traditionally been a hardware company and its efforts to become more of a software company have been moderately successful.  Legato acquisition, Documentum, all have found a place in the product portfolio but didn’t become leaders in their segment in the way EMC storage has been.  Moving a public company from a hardware supplier to a software supplier is a complex undertaking that I don’t believe can be achieved.  Merging with Dell and becoming a private company gives it an opportunity to restructure itself and its products to be more attune with the industry and its direction.
  • Dell and EMC together have an opportunity to merge not only product lines but also strengths; from manufacturing and supply chain to marketing and sales, a joint venture is much better equipped to move forward and compete in the software defined everything market place.  This is not to say there won’t be challenges.  The two companies differ in their cultures.  There might also be the issue of the company being too big, making it less agile than its competitors.  This is especially concerning since this merger is coming at a time when Symantec is shedding Veritas and HP is splitting into two in order to better compete.  Would, should Dell shed its consumer business as others like IBM have done recently?  As the largest transaction in the tech sector it will definitely be interesting to watch.