What Does Dell Buying EMC Mean for Enterprise Storage Customers?

Dell is going to buy EMC for a staggering $67 billion, making the deal the biggest technology takeover in history.

What will the merger mean for storage customers and the storage market in general? Two obvious outcomes should be lower hardware prices and a fantastic range of packaged solutions from a single vendor. Stress on the ‘single’ vendor. What all this means is that for all their hardware buying needs, IT departments now have one throat to choke.

The combination of Dell and EMC will create the world’s largest privately-controlled, integrated technology company, noted Dell’s official announcement. The company will be a leader in the extremely attractive high-growth areas of the $2 trillion IT market with complementary product portfolios, sales teams and R&D investment strategies.

Dell sells traditional storage products such as its Compellent and PowerVault SANs, but the EMC acquisition brings a huge range of additional storage technologies – particularly storage software and flash-based storage hardware. That’s good news for enterprise buyers because this complete portfolio – Dell’s servers, switches and networking gear combined with EMC’s considerable storage range, will give IT departments a one-stop shopping experience for all their infrastructure. Makes things simple, don’t it?

Some say the EMC acquisition could result in cost savings for EMC customers. EMC is used to healthy margins on its big gear whereas Dell is used to dealing with lower margins via its consumer channels.

“You are not going to see Dell doing ‘Buy one, get one free’ deals on VMAX, for example, but there is an opportunity for EMC hardware to be more competitively priced,” says Mark Peters, senior analyst at Enterprise Storage Group. “Even a slight dent in margins for EMC could still be part of an overall improvement for Dell, so they could find some mid-point that benefits both businesses.”

A great deal has been made about the product overlap between Dell and EMC, but on closer inspection it doesn’t appear to be that significant. Most of the overlap that does exist appears to be in the storage array space, where both Dell and EMC are big players.

The possibility that favored product lines could be discontinued is a worry for customers of both Dell and EMC, but Peters said these fears are overdone. “There is overlap in the storage array areas, but the big questions are ‘how much?’ and ‘does it matter?’

He added that if overlaps had to be eliminated then EMC hardware would probably win out over Dell’s, but eliminating overlaps is likely to upset some customers. “Why make them choose when you can just accept some overlap?” Peters asked.

This is a monster deal, wrote Enterprise Storage Group senior analyst Steve Duplessis in a recent blog. The combination of these two giants will be worth watching closely, as turf battles may ensue on who owns the customer relationship if that customer was previously a buyer from both. Maybe customer support will suffer as a result.

In his blog Duplessis says how the merged entity “will have to figure out who sells what, to whom, and under what conditions, but I suspect there will be a lot of hands off for the foreseeable future…. Synergy, at least on paper, should not be an issue.”