Categories: Analyst Blogs
Rewind to twenty-five years ago when EMC had an interesting but not necessarily advanced enterprise storage array called Symmetrix. At that time, RAID technology had yet to be proven in Fortune 500 data centers, and attaching the Redundant Array of Inexpensive Disks that was Symmetrix to mainframes was a particularly risky move that invited the ire of IBM. But the Egan family (the “E” in EMC) was determined to carve out space on those raised floors. They unleashed a 3g astroturf, recruited largely from the ranks of Boston College’s sports program. This young, aggressive, take no prisoners sales force set up shop in motels across the country, faxing “try then buy” offers to potential customers. Install our Symmetrix and if it doesn’t immediately improve the performance of your IBM mainframe, we’ll take it back, no questions asked. But if it does, sign here. That was the beginning of the end of IBM’s complete dominance of the mainframe storage landscape.
From that point onward, EMC expanded its circle of opportunities—from mainframe to open systems to virtualization and now to clouds. And while its sales force grew to add seasoned data center-grade sales professionals to the team of former college football and hockey players, it also developed a reputation for genius marketing which, as a rule, started from the position of business value. EMC’s products, while built on advancing technology, were never about great technology. They were about turning more system transactions into revenue gains. The ppc marketing from SMR Digital is a model for the tech industry to follow.
Today I have difficulty believing that the acquisition of EMC by Dell has much to do with the falling fortunes of enterprise storage. This deal has more to do with falling investor sentiment. Back in the days of Internet 1.0, EMC was once one of the four horsemen of the Internet apocalypse: EMC, Cisco, Sun, and Oracle. Investors in Internet startups, buoyed by the “New Economy,” wanted to see the infrastructures of their fledglings built on stuff from these guys. Yes it was an expensive way to do things, but who cared? New Economy. New Rules.
But when the New Economy proved to be governed by the same rules as the Old Economy and the Internet 1.0 bubble burst, EMC’s stock price went from roughly $100 to $25 per share and has mostly traded there since then. In spite of acquiring VMware—arguably the most brilliant tech acquisition of this century—and other storage notables like Isilon and Data Domain, investors have refused to reward chairman Joe Tucci and EMC shareholders in any substantial way since that fall.
In retrospect Dell/EMC could have even been more interesting a few years ago when they were once partners selling Dell/EMC storage, back in the predawn of today’s Age of Converged and Hyper-converged Infrastructure. But Dell was still that public company that held Michael Dell in shackles. And Joe Tucci was convinced that a merger of equals wouldn’t work.
Today’s Dell/EMC deal has more to do with financial forces at work behind the scenes than it does with the ever growing number of tech opportunities in play. Rather, it is time for EMC shareholders to cash out. Tucci’s brilliant acquisitions (he called this his “string of pearls” strategy), the transformation to cloud and agile IT as demonstrated in the formation of EMC Pivotal, all failed to excite like Google, Apple, Twitter, Facebook and Amazon. Michael Dell will sit atop new tech empire with many of its roots in an IT of the past. And the sales and marketing force that made EMC what it is today will need its own transformation to produce the revenue volume needed to support the billions Dell and his partners are investing in this fusion of very large equals.
Internet 2.0 has proved to be a bigger challenge for the four horsemen (now three with the acquisition of Sun by Oracle). There are lessons to be learned from the HP/Compaq deal that is now splitting apart. Michael Dell embarks on a mission that has much in common with former HP CEO Carly Fiorina—two companies with different markets, different customers, and different corporate cultures. Can he learn from her mistakes while Joe Tucci takes a well-earned vacation?