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.
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.)