Today is the day Dell officially acquires EMC. Having spent 18 years at EMC (and two at VMware), my attention keeps wandering to the topic -- and its meaning -- even though I've moved on to bigger and better things.
Maybe it's time for a little writing therapy?
We all have had plenty of time to process the single largest tech acquisition in history. Today, the combined DellEMC marketing machine is fully cranked up, blasting Happy Rays into the interwebs.
All as expected.
As most big events are a mixture of positives and negatives, this one is no exception.
Congrats To Joe Tucci
He also gets credit for the smartest IT acquisition evah -- VMware.
Many of us knew for many years that EMC as a standalone entity wasn't going to be critical mass in the new world order. Joe did the right thing, he sold the company to the right guy for the right price.
Way to go, Joe. It was a privilege to be on your team.
The Biggest IT Supermarket On Earth?
I can't speak for what Michael Dell is planning, but from here it looks like he wants to be able to sell more stuff to more people. A lot more. I keep thinking WalMart for traditional IT shops. I believe Michael Dell is one smart business dude.
But to make his model work, he's going to have to crank up the volume, and slash costs. Not to mention pay down a staggering debt.
That's somewhat at odds with the high-touch model of EMC, overlapping product lines, and lavish spending on R&D.
So EMC must change -- and drastically -- before too long.
VMware -- The Crown Jewel?
Michael Dell, now more than any other single person, is in control of VMware' future - bought and paid for.
As a result, changes will inevitably occur. Perhaps at a more measured pace, but they will happen. Many VMware employees mistakenly think that, because they are a publicly held company, they can act independently of ownership.
I beg to disagree.
That's why people buy things -- they want to put them to use.
And Then There's This Cloud Thing
EMC doesn't have a viable public cloud offering. Neither does Dell. Nor does VMware for that matter.
That's a problem. Handing out one-way tickets for your customers to get to other vendors' public clouds doesn't strike me as a viable long-term strategy.
The combined DellEMC will be restrained from building out a viable public cloud offering in the near future. Why? It takes billions of dollars and years of work before you even have a hope of making money. Not exactly an attractive proposition if you're an investor.
I would think that Dell's investment syndicate would want to get paid on the existing debt first, and that's going to take a while.
What do Amazon, Microsoft, Google and Oracle have in common? All have big public clouds, all have founders still engaged with the company with serious equity ownership. All are somewhat immune from activist investors.
Building a viable public cloud at global scale isn't for the faint of heart.
Michael Dell has stated that he sees the rise of public cloud as a great opportunity to sell stuff: servers and presumably storage. I think he's whistling in the dark. I think his play is to get increased market share in the shrinking on-premises enterprise IT market. HPE and IBM appear to be trying to do the same.
Back to my earlier comment about cranking up volumes and slashing costs.
Avoiding The Commoditization Trap
Differentiated things quickly become commoditized in our industry. That's true for both on-premises and cloudy stuff. Vendors who can't avoid commoditization get caught in a death spiral: lower margins mean less money to spend on creating new stuff that customers want and need.
Getting Really Big is one classic play to help stave off commoditization; the other is differentiating through unique IP that customers find valuable. In the IT world, differentiation usually means software farther up the stack. Oracle has chosen to invest up the stack: applications, databases, middleware, developer services, etc.
It's a very differentiated play.
IBM seems to be betting heavily on Watson. Neat technology, but I'm not sure that play can support IBM in its current form. HPE is rumored to be getting out of the software business, so we know where Meg wants to go.
DellEMC? Once you get beyond VMware's on-premises hypervisor business, and Pivotal's CloudFoundry, there's not a lot of there there. And big software acquisitions take big money, something that's in short supply these days.
The WalMart Example
Yes, I do visit WalMart occasionally. When I'm looking for inexpensive, undifferentiated and commoditized stuff, that's where I go. I make my visits as short and focused as possible. Great selection, great prices. That being said, I'm starting to like the grocery section.
WalMart is one of the two companies that has revolutionized how stuff gets into people's hands. The other, of course, is Amazon. I don't want to even think how much my family spends with Amazon Prime. It's almost too easy.
Both companies have mastered optimizing consumer supply and demand, albeit with different models. Both are masters of taking costs out of the model, and then doing it again. Both have made a lot of money in the process.
Unlike our enterprise IT world, neither is facing an obvious existential threat to their classic business model, e.g. the rise of public cloud. DellEMC, VMware, HPE and IBM certainly are.
Best wishes to all going forward.
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