EMC move will make Dell 'formidable', say partners

But resellers express concerns over size of integration challenge facing Dell as it attempts to pull off one of the biggest tech mergers in history

The snap reaction from partners to Dell's proposed $67bn acquisition of EMC has been positive, despite some expressing concerns over the scale of the integration challenge it faces.

Dell announced today it is grabbing EMC to create the world's "largest privately controlled, integrated technology company", a move broadly welcomed by both sets of partners reacting to the news.

Rupert Mills, managing director of Dell and VMware partner Krome Technologies, said the union would be the first time recent predictions of consolidation among the world's top tech giants - made by the likes of former Cisco boss John Chambers - have been borne out in reality.

"This could be the start of some dominoes happening among more vendors. I can only see Cisco, NetApp and HP looking to shore up partnerships in response to this," Mills said.

Mills asserted that there is an "awful lot of product overlap" between the two vendors, not only in midmarket storage but also in back-up and virtualisation, as well as with EMC's VCE alliance with Cisco, which he predicted may not survive for long.

"I just can't see them putting R&D into keeping all of the products running and competing with themselves," Mills (pictured) said. "My concern would be how long it takes them to stabilise these two very large companies after they merge, as there's going to be an awful lot of staff and processes overlap. Dell have been through many major acquisitions, including EqualLogic, Wyse and Quest, so they are well versed, but the sheer scale of EMC has got to lead to some disruptions in the short term.

"There will be an awful lot of product overlap, which will mean there will be a lot of shedding or discontinuation of products, from one side or the other. But providing the strongest one out of each of those survives, Dell will end up with a better offering in the end."

Stuart Rae, managing director of top-level Dell partner Nviron, said the union would benefit customers because "Dell naturally drives value in its product line".

"It's positive as it expands our product line. At the top end, Dell can't touch EMC. If we get access to the EMC product line, under unified branding, we will be able to get access to bigger deals," he said. "From a channel perspective, I'd be concerned if the channel becomes more restrictive. Dell relies on medium-sized, technically expert partners like us and we will be keen to get access to the whole product line. I'd be disappointed if there was a new tier partners like us didn't have access to."

Brett Edgecombe, director of EMC partner 101 Data Solutions, dubbed the union "great news" for his business.

"We've been a long-term Dell and EMC partner. EMC plays well in the enterprise space and Dell is good from the entry level upwards, so there are synergies at all levels," he said.

"EMC's R&D budget is around $2bn. If you add in Dell, the combined budget pool will be formidable for competitors."

However, Jonathan Lassman, managing director of reseller Epaton, which works with so-called next-generation storage vendors such as Pure Storage, Violin and Nimble, described the takeover as a "defensive move" for EMC.

"They still have the same top management as when I was there in 2001. The top boys [at EMC] have had enough. They can't fend off the threat from the next-generation storage vendors so they are taking a defensive move to cash in and get out of the game," he said.

The move is a "win" for Dell, though, Lassman added, arguing that Dell is just a couple of bolt-on acquisitions away from becoming the "biggest storage powerhouse ever".

"No-one gets fired for buying EMC," he said. "There are two end-user camps: those that are embracing next-generation technology; and EMC houses who will keep on buying EMC. So it's a great business. If Dell can keep that fresh and went out and bought a couple of next-generation vendors, it would be an outrageous organisation. But if they think they are buying the finished article, they are mistaken."

Mills pointed out that the acquisition would make Dell a "very leveraged business".

"It's borrowing $40bn, so I wonder if it will go public again," he said.

Des Lekerman (pictured), chief executive of Dell partner TIG, echoed this, saying: "They are going to have to service that debt so trying to hang onto all the teams is going to be a challenge. They are going to have to get some synergies without damaging the business."