Dell EMC must adapt or die in open-source and cloud-dominated world, say analysts


Last year Dell Inc. and EMC Corp. shook hands on the biggest technology merger ever. This might appear a boon to both if not for the shoddy track record of such deals, not to mention the wobbly footing of proprietary hardware companies squeezed by growing cloud and open-source providers.

John Furrier (@furrier) (pictured, right) and Paul Gillin (@pgillin) (pictured, left), co-hosts of theCUBE, SiliconANGLE Media’s mobile live streaming studio, kicked off Dell EMC World in Las Vegas, Nevada, today by running down the list of tech mega-mergers, including Burroughs-Sperry, Hewlett-Packard-Compaq and others. (* Disclosure below.)

“It goes on and on and on — pretty much all disasters. And we really haven’t seen a merger nearly this scale between two IT companies that has worked well,” Gillin said.

The fact that it is large and historically hardware-based doesn’t necessarily guarantee trouble for Dell-EMC. The future belongs to cloud and open source, and any company that embraces these and delivers value can certainly be profitable.

So far Dell-EMC appears to be undecided on cloud. On the one hand, there is its “hand-waving” over multi-cloud, Furrier noted, adding that latency issues continue to be a drag on this strategy.

Betraying possible confusion within the company, “Michael [Dell, chief executive officer of Dell Technologies Inc.] kind of dissed the cloud this morning in his presentation,” Gillin said.

“He said you can’t have a successful business, or your business is not going to grow as quickly, if you’re 100 percent cloud-based. So he was very much making a pitch for data center infrastructure,” Gillin said, adding that this is not surprising coming from a company as synonymous with hardware as Dell.

Many heads of legacy companies seem to be hedging their bets and taking the long view with cloud. “If you’re not Amazon, you have to take a long-term strategy, because what other choice do you have? I mean you’ve lost in the short term,” Gillin stated.

Nonetheless, Dell is modernizing with acquisitions like open-source software development platform Pivotal, Gillin pointed out.

Software primed for quantum leap?

Indeed, Dell-EMC would do well to embrace open source wherever possible to stave off very hard consequences, according to Gillin. Storage is the bread and butter of EMC, and everything it does there will feel open source close in.

“The biggest IT companies in the world, which are Google and Facebook, are both built on open-source platforms — I mean game over,” Gillin stated.

Those companies may represent a new software economy already sweeping aside the service model Dell-EMC and others are just getting aboard, Gillin added.

“They created business models that have nothing to do with the traditional software model but that have leveraged their expertise in the software that they’ve developed,” he concluded.

Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s independent editorial coverage of Dell EMC World 2017(* Disclosure: TheCUBE is a paid media partner for Dell EMC World. Neither Dell nor other sponsors have editorial influence on content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE