With EMC’s stock price not rocketing up for more than 5 years (not since they acquired VMware anyway) and rather keeping a stable balance, the overall market experience feel can be reduced to one word: stale. Seems like EMC’s strategy has been more around acquiring more parts / installed base around storage and trying to build their own cloud concept, rather than actually innovating their portfolio.
Storage is a fundamental part of the Cloud, as much as Networking is and innovating there seems like a real challenge specially because as everything infrastructure in the Cloud world…it’s invisible. This might have influenced EMC’s projection on the market. One tends to wonder if they did right in keeping VMware separate of their strategy, or better exploiting RSA, or if spin-offs like Pivotal and VCE really paid off. All in all, it seems EMC needed this and they got a sweet price (67B and cash) though it seems some stock holders are not entirely happy about it.
Now, what about the ones buying EMC? The memory of Mr. Dell stating that they would go private and bringing in Silver Lake into the game was still fresh in the market’s mind so when the announcement came out for those that didn’t know, rather than a shocker it was kind of an eyebrow lifter. Why? It seems as bold as the decision to go private but it does make sense or so it looks.
Dell is all about hardware. Competing within the datacenter with HP, Oracle and IBM has never been easy at server level, specially after the Cloud materialized into something tangible for Companies to consider and battling at the user / desktop level has always been about 2 things: run rate and renewal rates for laptops and desktops. Dell looks a lot like HP then, realizing costs only go up if you focus on Datacenter, and margin starts to drop if you just sell laptops. That might be the reason why Apple desisted from making servers (yes, they did make a few servers, read more about it here if you’re interested) but unlike HP and Apple, Dell still believes in the power of the “On Premise” premise for Datacenters. Maybe that is why they went after storage instead of networking and decided for EMC rather than Cisco.
There’s a lot to say yet and a lot of information to get. Here’s a very good analysis by Forbes on why Dell did this and why EMC went it it. I recommend you go through it. We might be witnessing one of the final game changers of the IT history starring two historic / legacy companies…or not.