Dell-EMC deal validates AWS model

Dell, Inc.’s record-breaking $67B buyout of EMC has created the biggest privately owned tech company in the world. But is it a winning deal? Commentators from SiliconANGLE, Wikibon and the tech community at large joined a Dell-EMC CrowdChat to discuss the implications.

Talking points

According to John Furrier, founder and CEO of SiliconANGLE, the deal signals “the end of client-server computing for the industry” and the validation of the Amazon Web Services, Inc. (AWS) model. Now, the question is, which companies will benefit from this merger and which ones will be left in the dust by the new technological juggernaut? And without a clear roadmap of offerings, there are still many questions about how (or whether) the merger will benefit customers.

On the bright side, Furrier believes that “the new Dell will become a strategic supplier and a one-stop shop for all things enterprise IT.” But CIOs need to gain clarity on the new services in order to keep enterprises running smoothly, and potentially integrate them with a wider menu of services and providers rather than opting for packaged, end-to-end offerings.

Might makes right?

CrowdChat participant Rob Steele asked whether a privately held Dell-EMC hybrid will have a “stronger advantage against publicly traded competitors,” given that it is now the world’s largest privately owned technology company.

Commentators also questioned whether cash flow might be an issue, although the sheer enormity of this deal suggests that Dell has no problem securing funding when needed. Wikibon Chief Analyst Dave Vellante pointed out that it frees the now privately held Dell to “write its own narrative and not be affected by stock price,” which could encourage innovation.

Other participants questioned whether the deal actually results in anything close to an end-to-end service provider, saying that it’s “nothing that Dell/EMC can truly control and own to improve and optimize and offer a full end to end optimized and integrated HW + SW stack.” It remains to be seen whether hardware integration alone is enough to draw customers without simultaneous software and application offerings.
RELATED: >VMware stock drops as confusion and speculation surround Dell/EMC merger | #DellWorld

Biggest winners?

Who stands to gain from this merger? Furrier proposed that IBM and Hewlett-Packard Co. may win new customers in the short term, while others mentioned Pure Storage, Inc. and Oracle as the resulting winners. Steele suggested that, ironically, it is EMC that may not see the benefit, as it’s akin to “Walmart merging with Porsche.” Another participant agreed, saying, “The Dell Software Group is the big winner in this deal.”

Biggest losers?

Muddu Sudhakar, VP & GM of Splunk, Inc., posed the inverse question: “Which startup companies will be biggest losers from Dell and EMC deal?” He brought up companies like Nutanix, Mirantis and Cumulus. Wikibon consulting analyst Brian Gracely mentioned Nutanix, Inc. and SolidFire, Inc.

But some participants thought that companies like Cumulus could actually benefit from the merger, given that EMC “brings no networking to the table” and Dell can continue its partnerships. But Sudhakar replied, “VMware NSX will kill Cumulus and Big Switch partnerships,” even though “NSX still needs to run on *something.*”

Opening gambit

Gracely asked what Dell-EMC’s first priority is likely to be: “Portfolio rationalization; sales models; cost-cutting; identify competitors, etc.?”

Sun Microsystems, Inc. and Oracle veteran Phil Dunn wryly replied, “How about defining a strategy to keep them alive for next 10-plus years? Something pertaining to Cloud would help.” Gracely pointed out that EMC was scheduled to make an announcement regarding Cloud in October. If that happens, a clearer picture may emerge, although Gracely also said, “None of the existing HW/SW vendors (except Microsoft) have a strategy that competes well” with AWS.

Dunn again offered an alternative perspective, saying, “AWS has only a public Cloud strategy. The world’s datacenter[s] aren’t going to shut down and transfer all to public. So having a private Cloud and hybrid Cloud strategy is critical. Oracle is one of few offering an end-to-end Cloud strategy.”

RELATED: What Dell’s $67 billion acquisition of EMC means for the data center
Others agreed that cost-cutting and financial engineering will be a priority. “It’s a private equity deal,” one commenter said, “so bean counters run it for [the] first 12 months, sort out all inefficiencies.”

Will the client-server era go out with a bang or a whimper?

Alan Cohen, CCO at Illumio, added a poetic note to the conversation with a look at the broader trends and implications of this shift: Cloud is in, client-server systems are out. But as in the T. S. Eliot poem, will the client-server era implode in spectacular fashion or simply fade away – “full of sound and fury, signifying nothing?”

Even though the public Cloud has made huge inroads across the market, when it comes to enterprise, most agreed that the on-premise datacenter will be around for a long time and hybrid infrastructure will continue be “the play,” especially among security-conscious enterprises. The main question, as VP of Marketing at Scality, Inc. Leo Leung put it, is where the proportions will end up in the “eventual split between on-premises, hybrid and purely public.” At the moment, for the biggest companies, he said, “It’s majority on-premises.”

And until the security questions of Cloud-native architecture are satisfactorily resolved for enterprise, it’s likely to remain that way for the foreseeable future.

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