News

Poll: Execs Expect Positive Results from Dell-EMC Deal

They see more innovation and stability, among other benefits.

• By Jeffrey Schwartz
• 11/19/2015

Large industry mergers can have a huge ripple effect on that industry, changing things in ways no one can see or even suspect. In the case of the Dell acquisiton of EMC, that could be especially true, given the fact that EMC owns so many disparate companies, including VMware. On the whole, though, managers expect there to be more positives than negatives to the deal.

At least that's what one survey of 200 C-level IT executives conducted earlier this month by IT advisory firm Enterprise Strategy Group has found.

Three-Quarters Are Bullish on the Prospects
The results show that 75 percent of customers believe the merger of the two companies will benefit their organizations, while 17 percent don't expect it to have any impact. Only 3 percent said they are worried it will have a negative impact and the other 4 percent don't know.

Customers who rely on both companies for their datacenter infrastructure were even more bullish; 84 percent said they expect to benefit. Of those who were primarily only Dell or EMC customers -- 68 and 66 percent, respectively -- believe the deal is good.

ESG pointed out that the survey was not commissioned by any third party, lending the data validity. It's also interesting to note that the top benefit they expect from the merger is "complete and more innovative solutions," according to 65 percent of the respondents.

The second largest expected benefit is that customers believe the two companies will offer more stability combined than apart (58 percent), followed by an expectation that Dell-EMC will provide lower cost infrastructure (55 percent). More than half (53 percent) see using the combined company for complete solutions spanning from endpoint devices to datacenter infrastructure, while 50 percent welcome having to purchase from fewer vendors.

Network Infrastructure Concerns
One area where customers may not put all their IT investments into a combined Dell-EMC basket is in network infrastructure. When asked about those who procure software-defined infrastructure from the VCE alliance, a majority (55 percent) said they'll buy networking components from EMC and Cisco, not Dell (though 26 percent would purchase components coming from both Dell and EMC).

Once combined, 60 percent say they expect to spend more with the new company; only 1 percent said they'll spend less. The obvious but important caveats to this particular data set are a) many of the questions are clearly predicated upon the transaction actually closing, and b) this data represents the attitudes of the current Dell-EMC install base.

"While retaining and growing these customers will be critical to the new firm's success, its aspirations will not stop there," according to the ESG report. "As the new Dell-EMC looks to steal market share from incumbents such as HPE and IBM, and fend off encroachment from cloud entrants like AWS (among others), its ability to foster the levels of interest described by respondents in this brief with these non-customers will be essential."

Plenty of Competition
The poll results may contradict the experience from other industry consolidations, which often leads to fewer choices and deteriorating service (anyone who has flown on a major airline lately can attest to that). I suggested as much to ESG Senior Analyst Colm Keagan, but he doesn't believe that comparison holds. "There are still plenty of market pressures coming from legacy vendors [IBM, HP, Microsoft, etc.], cloud vendors [AWS, Microsoft, Google, etc.] and emerging technology companies [Nutanix, SimpliVity, Nimble, Solidfire, etc.]  to keep Dell/EMC honest," Keagan said. "Plus with the huge debt service on the deal [$47 billion], they can ill-afford to start shedding customers by not over servicing them and keeping them happy. "

The bottom line, he added, is there still will be concerns about how the combined company integrates its sales and engineering teams, ensure any staff reductions aren't overly disruptive, and rationalize the product portfolios without leaving clients in the lurch. "But the initial client sentiment at this point is positive," Keagan said. "Execution, as always, will be key."