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EMC, Dell customers wonder what's in it for them

The acquisition of EMC and VMware has IT pros at Dell World wondering what the future holds for pricing, storage and support.

AUSTIN, Texas -- A week after the EMC-Dell merger announcement, its customers have plenty of questions about what...

the acquisition will mean for them.

From pricing to storage, attendees here at Dell World took a cautiously optimistic attitude to the future of both companies.

Ken Burrows, ‎senior manager for end user support at Blue Shield of California, headquartered in San Francisco, said he mostly uses HP equipment in his data center, but hopes for big things from Dell, as he shifts toward buying more from the Texas-based company.

"We're doing a lot of work to get away from HP," he said, adding that his company isn't pleased with HP's support. At a previous company, he worked to make it a Dell shop due to the company's products and ingenuity.

"I don't think anything will stop Michael Dell when he has his mind made up on something," Burrows said about the $67 billion purchase and merger of Dell and EMC, which is expected to be complete in mid-2016.

While it's rare that a large company such as EMC goes private, Burrows sees it as a positive move.

"With how much money is involved and how big this is, it just doesn't happen," he said. "[Michael Dell] wanted control and he has a vision to take the company where he wants to be."

EMC, Dell and VMware are leaders in the server, storage and virtualization markets, and will continue to sell products for the software-defined data center, converged infrastructure, hybrid cloud, mobile and security markets, according to Michael Dell, CEO of Dell, pictured below. That combination will allow Dell to differentiate with its vision, innovation, market power and horsepower, he said.

How low can Dell go?

Dell has found its place in the market with lower prices, but VMware and EMC don't sell on price.

"I'm curious about what they are going to do with EMC -- are they going to lower the price point?" said Dwight Goodwin, director of instructional technology at the 30,000-student Denton Independent School District in Denton, Texas.

Goodwin said his school district is an EMC, Dell and Cisco shop that buys all of its servers and support from Dell. The proposed merger "makes them a force to be reckoned with. They definitely bought the gorilla," he said.

However, there are overlapping products -- Dell already has the EqualLogic, Compellent and PowerVault storage products, for example -- which may mean the end of products that don't sell well.

"He'll probably take the best from both and go forward with that," Blue Shield of California's Burrows said.

But Dell should leave EMC and VMware alone, to start, because each company has been successful and should integrate EMC gradually over five years, said Emery Geosits, vice president, global business development, at PC Connection Inc. in Merrimack, N.H.

"Out of the gate you can't change too much," he said.

Michael Dell, CEO of Dell
Michael Dell, CEO of Dell

Once the deal is finalized and some integration has occurred, Dell will be powerful, Geosits said.

"The real fear should be once they do [integrate]," he said. "HP has used every tool in its bag."

HP CEO Meg Whitman issued a memo to employees after last week's news of the EMC-Dell merger, where she said Dell would be saddled with significant debt, and could be forced to divert attention away from developing and working on new ideas, Geosits said.

While that may be true, Dell said EMC is the best IT company at incubating technology and he plans to mimic EMC's techniques across all of Dell's businesses.

"We can fuel innovation across our entire portfolio," Dell said.

As a private company, the combined EMC-Dell will be "investing for the long term," with "no 90-day shot clock." Dell noted that the company increased its patent filings 27% in the past year over previous year, setting an annual company record and bringing its total patents to more than 8,000.

Robert Gates covers data centers, data center strategies, server technologies, converged and hyper-converged infrastructure and open source operating systems for SearchDataCenter. Follow him on Twitter @RBGatesTT or email him at rgates@techtarget.com.

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What do you think of the Dell-EMC deal?
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We published a few thoughts about the Dell/EMC merger:

http://wikibon.com/top-10-things-you-need-to-know-about-dell-buying-emc/

http://wikibon.com/customer-and-partner-survival-guide-to-dells-acquisition-of-emc/

IMO, the most interesting comments that Michael Dell made at the announcement were:
- we expect to see a rapid de-leveraging of this deal within 12-18 months
- we see 3x the synergies for growth vs 1x the synergies for cost reduction

This tells me that they will be selling assets quickly to raise funds to pay down the debt. It also says that they need to find way to upsell the broader portfolio in deals vs. individual products. The latter was the biggest miss of the EMC Federation - it was great at allowing individual innovation at companies/groups, but didn't have the framework in place to sell the entire portfolio consistently to their largest customers. Fixing that has to be a top priority for the new Dell.

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Brian, thanks for your comments. What are some specific examples of ways you think customers will see the entire portfolio pushed more consistently?
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The real question is, which assets? and to whom? and what happens to users of those products? It will be interesting to see how they decide which of two competing products to keep.
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