SDN Technology

EMC Mulls Merger With HP or Dell – Reports

In a move that would profoundly change the data center and SDN landscape, EMC is considering merging with a rival amongst other options to navigate an uncertain future, recent reports suggest.

EMC Corp. (NYSE: EMC) "for nearly a year held off-and-on merger discussions" with HP Inc. (NYSE: HPQ), although those talks recently ended, according to The Wall Street Journal. "It isn't clear whether those talks could be revived," the Journal said. EMC also talked with Dell Technologies (Nasdaq: DELL), and other potential deal partners include Cisco Systems Inc. (Nasdaq: CSCO) and Oracle Corp. (Nasdaq: ORCL).

EMC CEO Joe Tucci has indicated he will step down by early next year and hasn't announced a successor. Hedge fund Elliott Management Corp. has taken a big stake in the company and wants it to break up.

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The deal would be important to carriers, who are developing data centers to fuel cloud expansion. EMC is a leader in data center storage.

Moreover, EMC owns an 80% stake in VMware Inc. (NYSE: VMW), which is a leader in SDN with its NSX network virtualization platform. VMware does the main part of its trade in the enterprise, but is looking to build its carrier business. "VMware, which trades publicly, is now EMC's crown jewel," with a market capitalization of $40 billion, "accounting for most of its parent company's value," the Journal reports. (See VMware Laughs at Container & OpenStack Threats, VMware Upgrades NSX, Beefs Up OpenStack Support, VMware, Cisco Build Rival Data Center Teams, For Cisco, Is 'SDN' Code for 'Crush VMware?')

Both HP and Dell are aggressively expanding their enterprise data center businesses into carrier SDN. (See HP Attempts NFV Surprise Despite Spoilers, HP Debuts SDN Management Software, Switches, HP Beefs Up Its SDN Portfolio, HP Doubles Down on OpenDaylight, HP Looks to Conquer Carriers With NFV, Open Season: Dell Taps Into Big Switch and Dell Opens Arms to Cumulus OS.)

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

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MikeP688 10/3/2014 | 4:58:46 PM
Re: Amazon? So far the markets seem not to think so with the rather narrow range IBM's stock has been and how it has languished.   There is no question it will be a mainstay--but how effective is a question in my view.    
Joe Stanganelli 10/3/2014 | 4:28:29 PM
Re: Amazon? @MikeP: Perhaps I'm being pedantic, but I think IBM knows exactly what it wants to be; it's just a bit clueless as to how it's going to get there.

Thus the mergers/acquisitions/partnerships all willy-nilly.  It's like betting on all the numbers at the roulette wheel.
MikeP688 10/2/2014 | 1:09:46 AM
Re: Amazon? Happy Q4!! :-)

It is tragic--but part of the challenge being faced as IBM tries to figure out what it wants to be.   The market seems to have spoken so far as the stock has traded in a narrow range for a year. 


Joe Stanganelli 10/2/2014 | 12:04:18 AM
Re: Amazon? @Mike: Of course, the other issue with IBM is that they have to smooth out the transitions -- which I think feeds into your point.

Case in point: I used to be on a first-name basis with the majority of the IBM reps at trade shows.  I'd see the same faces all the time.

But in the past year or two, all of them are gone -- almost all having been replaced by largely less knowledgeable people who joined IBM through an acquisition.

IBM hasn't just made a hardware-to-software transition.  It's become a melting pot of companies.  I'm not sure how well that business plan is going to work for it.
MikeP688 9/26/2014 | 1:27:12 AM
Re: Amazon? The New IBM CEO understands that and there is question of the transformation.   But the challenge is whether the transformation will come soon enough though.    
Joe Stanganelli 9/26/2014 | 12:21:32 AM
Re: Amazon? Of course, something like less than 20% of IBM's business these days is hardware.  I think that switch has already been made, for the most part.
MikeP688 9/23/2014 | 2:57:03 AM
Re: Amazon? I am not sure if IBM is a right fit--they are in the midst of a partnership with Apple and they still need to make sure they have their own house in Order as they're dealing with the switch away from "hardware".   
Joe Stanganelli 9/23/2014 | 2:52:27 AM
Re: Amazon? Yeah, I don't see Dell going for EMC either unless the price is right.

If I had to bet money on an eventual buyer, I'd pick IBM -- simply because acquiring companies is almost all they do these days.  ;)
MikeP688 9/22/2014 | 11:02:00 PM
Re: Amazon? The changes in Tech never ceases to amaze.    I have read with keen interest the discourse on Amazon.    I frankly see no need for Amazon to take on EMC--why would they want to do it especially as the price of Hardware margins keep dropping and dropping.    It does not fit the takeaway I have had from Amazon as it continues its' dominance in the Cloud and tries to be a player in the Mobile Space (especially as it has introduced Kindle Tablets & wants to somehow make Kindle Phones work).   I also think Amazon needs to watch its' back ever more in lieu of the Alibaba having broken through as it has.     VMWare, though, is an intriguing potential prospect--but with the move towards constant mobility (that Amazon is trying to play in with its' product space), it does not make sense.     As for HP & Dell, I am not sure that Dell will be in a position to take on any additional debt right now (but we don't really know) and not sure why HP would want to take on a declining margin business-something that has been going on for upwards of 10 years.   
DHagar 9/22/2014 | 4:09:17 PM
Re: Amazon? Joe Stanganelli, I am tracking with your thinking.  I believe VMWare may be a key interest for Amazon.  This could complement their other attempts to move into cloud and other services.  Especially if HP or Dell are not biting, which seems to be the case.

Very interesting development FakeMitchWagner - I thought after EMC acquired DG that they would have the ability to make it - apparently not!
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