I worked at Dell from 2004 to 2013, in storage sales and storage marketing, which makes me about as qualified as anyone to comment on the news today. There’s plenty of great financial and strategic analysis available in your favorite publication, so here’s more of a personal view of the news.
Having lived through the days of Dell’s reselling and OEMing EMC products, to the acquisition of EqualLogic which weakened the Dell-EMC relationship, to the acquisition of Compellent which ended it, there’s no doubt that these companies have a storied history together.
When we were reselling EMC, this would be back in the 2005-2008(ish?) timeframe, there were many ways in which we were subservient to EMC. We’d get deals done for them that their finance group didn’t want to extend credit for; we’d be happy for deals at 3 pts or 5 pts because we were focused on top line enterprise revenue. Most of our deals in the midmarket weren’t sold as strategic solution sales, they were just bundling our hardware with their hardware. It was a huge business to be sure – at one time 30-40% of all Clariion business was running through Dell. But it was a very small number of those that Dell really drove as our own. I should know – I did some of them.
When Dell bought EqualLogic, everyone thought it would be the beginning of the end – and it was. The management line was that there would be opportunities appropriate for each and as consultants, it was our job to recommend the best one. They made flow charts and sales aids and, as expected, it all went over like a lead balloon with the EMC sales teams. I’d work in the EMC office weekly, and increasingly, saw EMC reps working with other partners on deals. We managed to bring back some semblance of partnership at the field level, but with significant challenges around margins, renewals, and account control.
That lead balloon finally thunked down when we acquired Compellent. Within a few quarters, our relationship had ended and Dell struggled (and I’d say succeeded) in standing on our own two feet to sell enterprise server and storage solutions. We learned to work with the channel communities we had inherited from our acquisitions. We never would have succeeded in any of that with EMC looking over our shoulder. But we struggled with products that were more elegantly designed but with less mass appeal, especially upmarket.
So fast forward – and here we are today. Dell has purchased EMC and the companies and sales forces and partners and customers have to figure out what all that means. There was a time when Dell and EMC were both flashy, successful companies – Dell with an innovative supply chain advantage and EMC with best-of-breed hardware. And now they both need to be reinvented in an age of AWS dominating, Pure Storage and Nimble IPOing, IBM selling off their server business, and HP breaking up their business.
Now for the lightning round.
What happens to Dell’s storage lines? I spent years – literally – selling and marketing EqualLogic and Compellent. I positioned them against EMC in numerous ways – one-on-one to customers, in marketing materials, and in training sales orgs. This was after years of selling Dell’s OEM EMC line. So I’m very familiar with both. There are ways in which Dell’s products are significantly better technologies architecturally. And then advantages to EMC’s products, most notably more complete product sets and interoperability. All that said, I think EMC’s lines will likely dominate. They have more market share, more respect, and more than a small but exceedingly loyal customer base. It’s one of those cases, where the academically “right” answer to solving business problems isn’t necessarily the one that wins. It’s mind-boggling to think that the ~$1B spent on each of EqualLogic and Compellent is 1/67th the size of this purchase.
Is this the best time for Dell to purchase EMC? It’s not a bad time. Had the companies merged sooner, however, they would be better positioned. The time and energy they’ve put into fighting each other over the past few years could have been put to better use innovating as a single entity – EMC’s R&D teams are world-class, and Dell’s ability to distribute technology widely to a broad audience is unmatched.
Will the cultures mesh? It probably doesn’t matter to the long term success of the sale, although it may feel bad to lots of employees for a while, and they may lose some great people as casualties to the deal. I think Dell’s culture is a little softer and friendlier than EMC’s, but they are both laden with bureaucracy and politics. Michael (as we called him) is a good leader, and has proven his ability to execute major financial and strategy moves (see, “private, taking my company”). There is a lot of overlap in the companies, which will lead to a lot of political positioning so I imagine it will be a long time before it feels like a single company.
Are you glad you’re out of the fray? Yes, mostly. The impact that I’ll be able to make in my current role and company is significantly bigger (by orders of magnitude) than what I would have been able to do at EMCell. Especially in a time of change like they are about to undertake, when it can be even harder to actually get anything done. But there’s something special about an underdog like Dell, led by an underdog like (Michael) Dell, pulling off a coup like this.
Stay tuned, I’m sure there’s lots more to come.