As I mentioned in my previous blog about the IBM-Cleversafe deal, the goal of any technology buyout or merger is to make the combined entities more valuable than they were prior to the acquisition. At Storage Switzerland, we refer to this as a case of 1+1=3 objective. With the announcement of Dell’s intent to buy EMC we need to change the model to 2+2=6, but the question is can the combined Dell/EMC pull this off? What do they need to do, and what can go wrong?
Do the Obvious
The first step on the way to 6 is to do the obvious stuff first. Quickly integrate Dell servers into the EMC storage portfolio. EMC has at least four different product offerings that leverage off-the-shelf Intel servers; no reason why those should not be Dell based immediately.
In addition to integrating Dell servers it also seems obvious to leverage EMC’s enterprise storage offerings right away. There is no need for Dell to invest or try to compete with their products in that end of the market with their current products. XtremIO and all of the EMC Cloud offerings (ECS for example) have almost no conflict with Dell’s storage solutions, so green light those and start selling them as a combined entity.
Doing the obvious is critical to early success. One of the costs in an acquisition like this is loss of employee productivity as they wonder what to do. Giving clear marching orders with some decisions made right out of the chute should limit that potential productivity loss considerably.
Simplify the Storage Portfolio, FAST
The next step on the way to 6 is to simplify the storage portfolio as quickly as possible. As indicated above, the EMC enterprise offering is fairly unique between the two companies, so that work is done for the most part. Dell-EMC’s mid-tier and SMB storage offerings have a lot of overlap. The quick decision would be to sunset EMC mid-range (VNX) and switch new customers to the revised SC series from Dell. Then the rest of the storage intellectual property should be explored for unique features, and those features should be ported into the rationalized product line.
Existing customers should, of course, be given plenty of time to transition and no hard migration timetable to follow. If they use EqualLogic, VNX, VNXe etc… they should be able to stay with that product until they are ready to move. Our focus is new projects. A simplified portfolio will be easier for those customers as well as EMC sales and engineering to get behind and understand a strategy.
Michael Dell mentioned a transition plan of 18 to 24 months. That’s too long. The storage portfolio needs to be rationalized within 6 months of the transition. The employees at the combined organizations need to know which “wood” to put behind which “arrows” as soon as possible.
Trying to keep everyone happy is a recipe for disaster. Dell-EMC has the advantage of doing all this messy work behind closed doors. It should take advantage of its closed doors and cut fast.
What Can Go Wrong?
What can go wrong? Everything. The primary concern is that EMC has 60 days to entertain better offers. In theory a company like HP, Oracle, IBM or even Amazon could come in and buy EMC. Then there is, of course, all the integration issues as well as a potential exodus of talent from either of the companies. Much of that talent will go to a new round of startups, meaning this attempt at consolidation could actually lead to further storage industry fragmentation. We’ll examine what can go wrong and the impact of this potential deal on the rest of the industry in our next entry.