- EMC already has problems with too many product lines that overlap. This merger will make it worse. Expect a bloodbath.
- EMC has been trying to get into more compute, one assumes this is because of a recognition of software-defined-everything in the cloud and hybrid cloud. Dell has compute, there's obvious potential there.
- Storage margins are not compute margins. Because of this the two companies are structured very differently, EMC is a top-of-market company with best-in-class aspirations on all products. This is to drive high margins. Dell has historically focused on efficiency and made profits off of those efficiencies in low-margin segments. This deal gives Dell a better best-in-class story with higher margins by selling through the EMC brand. This gives EMC products a better down-market product opportunity by selling through the Dell brand without cannibalizing their best-in-class products.
- Pathways and relationships mean a lot. EMC might have been struggling some lately, but they are placed very well in large enterprises as the "trusted advisor" vendors want to be. They sell well into the c-level and have better golf course sales than almost any other vendor. Their sales force can pull Dell up into those discussions.
- vmware might have a time of reckoning. They have the focus of a company that grew too fast and didn't have any evolutionary pressure for most of its growth, they were alone in the market too long to grow tough. This deal could create much more aggressive board-level influence on vmware's product and design focus, or force them to mature out of a growth mode that pursues acquisitions and new products in a willy-nilly fashion.
OK - that's what I have in the fifteen minutes I set aside to write this. Thoughts welcome in the comments.
--paul
