What Will A Merged Dell-EMC Look Like?

Dell Looks To Make History With EMC Acquisition

Dell unveiled bold plans to acquire storage king EMC in a $67 billion deal that transforms the onetime PC maker into a $90 billion enterprise computing powerhouse.

The deal --- the largest in the history of the IT business -- creates a new world order in the intensely competitive enterprise computing market. When the acquisition finally closes, which Dell said would likely happen between May and October of 2016, Dell will be an enterprise superpower with a prominent position in nearly every key enterprise technology segment, including servers, storage, virtualization, networking, cloud computing services, security, big data and IT services.

So what will the combined Dell-EMC entity look like? A CRN analysis of the product portfolios of both IT giants shows relatively little overlap, based on the current product lineups of both companies. Here is a look at how they might come together.

What Would A Post-Merger Dell/EMC Look Like?

Dell's acquisition of EMC would create a nearly $100 billion IT superpower with what could well be the deepest and broadest hardware, software and services enterprise portfolio. Dell-EMC would be:

-- The world's largest storage vendor

-- The world's second-largest server vendor

-- The world's third-largest networking vendor

-- One of the world's largest software vendors

-- The world's premier provider of virtualization technology

-- One of the world's top cloud and cloud technology providers

-- The leader in the big data and software development tool markets

Caveats, Provisos, And So On

Of course, the final product and solution offerings depend very much on a couple of factors, key of which will be what lines Dell might sell off while putting the two companies together.

For instance, it could conceivably sell off VCE, EMC's RSA security offering, or Pivotal's development tools business, or other parts of EMC, either as a way to recoup cash or rationalize its business.

This would be in addition to whatever parts of the combined Dell/EMC storage line the company might consider redundant given the overlap in this part of the business.

Storage Lineup: The Competition

EMC is the undisputed king of storage overall, while Dell is a distant fifth place when considering external storage, according to market-research firm IDC. However, if the amount of storage sold inside servers, which at Dell is a big business, is considered, then Dell is a solid No. 3 behind EMC and Hewlett-Packard in market share.

Storage is the biggest competitive area between the two. EMC has its VMAX enterprise storage and VNX midrange storage lines, which compete against Dell's Compellent, EqualLogic and PowerVault storage lines. Could both coexist in a combined Dell-EMC? Probably, at least for a few years. Both companies have a lot of experience dealing with disparate storage lines.

Rationalizing The Storage Lineup: Flash Storage

Despite competition from startups like Pure Storage, EMC is the world's largest flash storage array vendor. The company has two separate all-flash lines, including XtremIO, which EMC boasts is the fastest-growing storage line ever, with aggregate sales of $1 billion in the first six quarters, and DSSD, which is expected to be released this year. EMC also just acquired Graphite Systems, a startup developer of high-performance storage technology.

Dell, meanwhile, has all-flash versions of its Compellent arrays. They include the latest model, which was the first to adopt low-cost TLC 3D NAND technology to bring the cost of all-flash storage solutions to as low as $1.66 per raw gigabyte of capacity.

The two companies' lines could coexist in a single company, with XtremIO and DSSD targeting high-performance flash applications and Dell Compellent targeting high performance at a lower cost.

Rationalizing The Storage Lineup: Midrange Storage

In the midrange, Dell and EMC have some product overlap. EMC's VNX competes with Dell's Compellent and EqualLogic lines, although VNX offers a higher-end solution than its Dell counterparts. Because of that, Dell could conceivably offer both VNX and Compellent and/or EqualLogic to customers.

Another possible scenario would be to cut either the VNX, Compellent or EqualLogic line as a way for the combined company to start taking advantage of a move toward software-defined data centers using the EMC or Dell storage software with Dell servers.

Interestingly enough, Dell's entry into the enterprise started with a 2001 agreement to resell EMC's Clariion line, the precursor to today's VNX line. That relationship ended in a messy divorce 10 years later.

Rationalizing The Storage Lineup: Enterprise Storage

EMC's top-of-the-line VMAX storage family, the storage market leader's bread-and-butter enterprise offering, has no Dell counterpart, and so combining EMC and Dell would not impact this part of the market.

VMAX revenue has been falling, although it may have recently stabilized, as customers increasingly look toward alternatives for high-end storage and EMC focuses on its XtremIO all-flash storage line. However, VMAX is still a huge cash generator.

With VMAX, Dell would have access to some of the most prized Fortune 1000 customers. That door opener would give Dell a major opportunity to sell those companies an end-to-end portfolio of hardware, software and services.

Rationalizing The Storage Lineup: The Other Contests

EMC has several other storage lines that have no Dell counterpart or where Dell is a relatively minor player.

In the purpose-built backup appliance market, EMC Data Domain is the industry leader. Dell, on the other hand, builds backup appliances, like its DR series based on its Dell PowerEdge servers. The two could coexist in a single company, as the Data Domain line targets a higher end of the market.

For software-defined storage, EMC has ViPR, ScaleIO and related applications, while Dell has been focused on partnering with third-party vendors. Combining the company would likely result in the EMC technology dominating in software-defined storage.

When it comes to data protection software, EMC's Avamar, NetWorker and SourceOne Archiving applications and Mozy cloud storage offerings would be pitted against Dell's AppAssure, NetVault Backup and vRanger offerings. There would likely be some rationalization of product lines here. However, Dell's entry-level backup appliances would likely survive.

A number of other EMC offerings including the Isilon scalable NAS solution would likely also survive.

The VCE-Converged Systems Impact

A Dell-EMC merger could mean big changes in the companies' converged infrastructure and hyper-converged infrastructure business, particularly the VCE relationship with Cisco.

EMC's VCE Vblock converged systems and VSPEX reference architecture would likely survive, but would change as Dell replaces archrival Cisco's server and networking technology with its own.

For hyper-converged infrastructure, EMC -- like many of its server and storage rivals, including Dell -- bases its solution on VMware's EVO:RAIL software, sales of which have been slow.

Dell, on the other hand, has relationships with multiple hyper-converged infrastructure technology suppliers, including Nutanix, Nexenta and others via its Blue Thunder software-defined storage strategy.

EMC would likely dominate the combined company's converged infrastructure line, while Dell would likely dominate its hyper-converged infrastructure business.

Big Data Lineup: Pivotal Makes It Move

EMC has invested heavily in big data analytics, particularly with its Pivotal offering, and offers integrated hardware-software appliances for big data.

Solution providers said the Dell acquisition could give Pivotal a shot in the arm, courtesy of Dell's enterprise dream team, including Dell Enterprise Group CTO Paul Perez (pictured), a technology visionary who helped drive the success of Cisco's UCS during his four-year tenure there.

Perez is building out an end-to-end enterprise architecture and Pivotal would add superstar technical talent to his team. Dell already has some hot big data technology, including its 2014 acquisition of Statistica, as well as a technology partnership with Oracle.

Virtualization: Dell Becomes The Holder Of The VMware Keys To The Kingdom

Dell's acquisition of EMC would provide it with the key to a virtualization kingdom by taking control of virtualization kingpin VMware. That's because EMC has an 80-plus percent stake in VMware, which has a market capitalization of $35 billion.

Michael Tanenhaus, principal at Mavenspire, an Annapolis, Md.-based solution provider and Dell channel partner, said a Dell purchase of EMC including VMware would give Dell its own wholly owned intellectual property related to virtualization. This would make Dell a major player in the software-defined universe, Tanenhaus told CRN. "Software-defined is the future," he said. "This would give Dell a huge play here."

Dell-EMC: A New Cloud Computing Power

The EMC acquisition will instantly put Dell into the cloud computing infrastructure fast lane as a result of EMC's $1.2 billion acquisition in July of Virtustream, an enterprise computing cloud services provider.

Virtustream, which has gained enterprise cloud share with a focus on mission-critical SAP applications, gives Dell access to a network of data centers in the U.S. and Europe and a roster of blue-chip enterprise customers like Coca-Cola Co., Domino Sugar, Heinz, Hess Corp., Kawasaki, Lexmark and Scotts Miracle-Gro.

The Virtustream offering would join Dell's Enstratius cloud management offering, which supports more than 20 public/private cloud platforms, including Amazon Web Services, Windows Azure, OpenStack, VMware and Rackspace.

Security: A New Client-To-Data Center Security Power

EMC and Dell both have very strong security offerings, with Dell focused on the client market and the midmarket and EMC's RSA unit focused in the enterprise.

EMC's RSA, in fact, is one of the best-known security brands in the industry, and is also the name of the security industry's best-known security conference. RSA earlier this year released a new family of Via smart identity solutions that run from the endpoint to the cloud.

Dell has a wide range of security software buttressed by its March 2012 acquisition of SonicWall. Dell is pushing SonicWall higher into the enterprise, releasing earlier this year the first major upgrade to its SonicWall TZ series firewall in nearly six years. The new product, which is four times faster than the last-generation TZ series, is being backed up with a slew of incentives aimed at upgrading an installed base of more than 1 million firewalls.

A Client And Server Power

Dell has made PC and server market-share gains since going private in October 2013. Dell said the company has gained market share in the PC business for 11 consecutive quarters, Dell's longest run of success since the 1990s, and is now the leading vendor in commercial PC sales for the U.S. Overall, Dell is the second-largest PC vendor in the U.S., and the third-largest in the world, according to IDC.

In the server market, Dell in the second quarter of 2015 enjoyed a revenue increase of 5.9 percent over the previous year, according to IDC. This solidified Dell's position as the world's second-largest server vendor after HP, with second-quarter revenue of $2.4 billion.

"I love having control of our destiny and being able to make the investments," Dell founder and CEO Michael Dell (pictured) told solution providers earlier this month at distributor Synnex's Inspire North American conference. "We're operating with a whole different pace in terms of our aggression and gaining share." An EMC deal would push aggression and share gains to another level.

Networking: Big Win For Dell

Dell is also a major networking vendor, and in June said it took the No. 3 position for overall networking market share. A strong networking offering would be a key asset to a combined Dell-EMC as the new company would likely lose its Cisco relationship over time.

Taken together, the addition of Dell servers and networking to EMC's solutions would be a major hit to Cisco, an archrival to Dell.