UPDATED 09:25 EDT / MAY 05 2016

theCUBE Live at Dell World 2014 Michael Dell NEWS

Dell/EMC merger: Customer impact will be minimal in the short-term, but long-term doubts remain

Huge tasks still face both Dell Inc. and EMC since the former announced it planned to acquire the latter in a $67 billion deal last October. Dell still needs to close $57 billion in financing, EMC’s shareholders need to approve the deal and so do China’s regulators.

Nonetheless, both Michael Dell and EMC’s executives were smiling at this week’s EMC World 2016 event, promising that the deal is still on track to conclude by the end of October. Both Dell and outgoing EMC CEO and President Joe Tucci gave keynote speeches assuring the audience that the merger will be a good thing for customers. EMC will press ahead with its plans for storage, transitioning from spinning disk to flash, from on-premises to the cloud, and from disparate systems to converged infrastructures.

EMC customers should be heartened by the fact that several of the company top executives will stay on board, even though CEO Joe Tucci is likely to retire. Staying with the merged company will be David Goulden, who’ll lead the new Enterprise Systems group comprising storage and servers; Bill Scannell, who will be president of Enterprise Sales; Howard Elias, as president of Global IT Services; and Jeremy Burton, who’ll be the combined entity’s chief marketing officer.

The storage product overlap

The reality, however, is that Dell and EMC have a significant amount of product overlap in storage, and that will lead to some tough choices.

According to The Register, the combined “Dell Technologies” entity will own four mainstream backup software products, three mid-range arrays, two mainstream data protection appliances, and a whopping four hyper-converged appliances. A debt-laden Dell Technologies will need to cut costs, and overlapping product lines are an obvious target.

Likely candidates for the chop include Dell’s line of Compellent and EqualLogic arrays, Dell’s DR Series data protection appliance and EMC’s Documentum content management service. Which hyper-converged appliances will make the cut is anyone’s guess, but it’s clear they won’t all survive.

The product overlap has yet to be seriously addressed by either Dell or EMC executives, but in an interview on theCUBE at EMC World 2016, Elias stressed that customer protection is the foremost concern of both vendors.

“Both companies…have created tremendous value for the customers they serve,” Elias said. “So [we will] protect the value that we both create.” Elias’ full interview is below.


Dell has won praise for communicating its intentions pro-actively, said Holger Mueller, principal analyst & vice president of Constellation Research, Inc. However, he warned that “not all product groups will survive and not all personal relationships will persevere, so its time for customers to reach out to the new Dell Technologies leadership ASAP.”

Question marks over innovation?

Another big question is about the combined companies’ ability to continue to innovate. As Manish Goel, a senior vice president at rival Hewlett Packard Enterprise Co. pointed out in Computerworld, it isn’t just Dell that’s acquiring EMC; it’s both Dell AND its partner, the private equity firm Silver Lake.

The private equity firm will be focused on revenue growth, and that can happen to the the detriment of customer relationships, Goel asserted.

“All eyes are on whatever can boost cash flow; all strategies turn inwards, as the organization works to decide what goes and what stays,” he wrote. “By the time the company can turn once again to external realities, like rebuilding customer relationships, things have moved on, and the recovery period can be protracted.”

The merger will happen in a storage industry that is racing forward, with all-flash arrays pushing into top-tier storage and 3D NAND promising massive gains in performance and capacity. EMC will be challenged to keep up with the pace of innovation while managing big organizational change.

Customers can breathe easy, for now

The good news for customers is that they’ll most likely have lots of breathing room before they feel the real impact of this merger. Roger Cox, a research vice president at Gartner Inc., told TechTarget that while the two firms’ competing product lines will almost certainly be consolidated, the process will take time.

Cox cited the example of General Motors Co., which acquired Buick, Chevrolet, Oldsmobile and Pontiac and kept them all as competing brands for several years before trimming down to just Chevrolet and Buick. Cox reckons Dell and EMC will keep their competing storage products around for at least five years before consolidating.

“Users should continue down the path of buying whatever they think they’re going to buy, so long as they understand that the lifecycle of these products might be five years,” the analyst said. “As long as the new Dell/EMC keeps upgrading these competing platforms with the latest technology from Intel, the latest disk drives from Western Digital and Seagate and the latest flash technology from whoever, then why not?”

That may be so, but what with so much uncertainty around Dell’s longer-term strategy, customers are well advised to have contingency plans in place in case products are discontinued and innovate stalls, said Constellation Research’s Mueller. Those plans should include identifying alternative technology providers or, even better, creating a multi-vendor strategy as an insurance policy.

“Putting all of your eggs in one basket is risky, so enterprises should chart their IT strategy for the next three to five years, understand what investments are needed on premises and in the public cloud and talk to the top three providers of each offering,” Mueller said. “But it is tougher for SMBs, which often run in single-vendor environments. They still need to do the same, though – chart the strategy and then understand how much Dell Technologies and others are part of it.”


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