A New Data Storage Market: What Dell-EMC Customers Need To Know

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There is no denying that there has been a lot of press buzz around the announcement of Dell’s acquisition of EMC; in fact, it’s been touted as the biggest technology deal in history.

But given the uncertainty of the newly combined entity’s market strategy, even the staunchest EMC loyalists can’t ignore the need to develop a contingency plan – one that should include identifying alternative technology partners and establishing a multi-vendor strategy.

While most of us in the industry tend to think of it as simply “the Dell-EMC deal,” it’s actually more accurate to think of it as the purchase of EMC by both Dell and its financial partner Silver Lake, a private equity and venture debt firm (here’s a Bloomberg profile of Silver Lake). Vendor consolidations tend to be disruptive for customers at the best of times – key executives move on, often to competitors; trusted product lines disappear; channel partners and resellers seek new supplier relationships. But in a private equity deal the turmoil can be much exacerbated. All eyes are on whatever can boost cash flow; all strategies turn inwards, as the organization works to decide what goes and what stays. By the time the company can turn once again to external realities, like rebuilding customer relationships, things have moved on, and the recovery period can be protracted.

Beyond the headlines and hype, the timing of this merger comes at a difficult juncture for EMC. That’s because enterprise data storage is in the middle of not one, but two revolutions: the flash wave, which is propelling droves of customers to join the mainstream adoption of flash in the datacenter; and the era of tight integration of storage with networking and compute, including innovations in the server-based storage market. Both raise pressing questions for EMC customers that have garnered little attention in the acquisition news.

The scoop on the state of Flash

EMC has recently announced its commitment to an “all-flash, all the time” market strategy. But at the same time, the company has struggled with overlapping product sets and as many as four different flash architectures – DSSD, XtremIO, VMAX and VNX-F. This complexity was problematic for EMC as a standalone company, and the merger will do nothing to improve things, especially with the inevitable reduction in investment that a merger always brings. Customers simply don’t have time to sort through complex overlapping product SKUs in a world where business is speeding up.

While EMC tries to find the time to rationalize its product sets post-merger, amid all the turmoil of the transition, the danger is that it will be left behind by the sheer breathtaking speed at which innovation is happening in the flash market. For instance, in the past few years we’ve seen new combinations of solid state with spinning media. We’ve seen all-flash arrays pushing further into Tier 1 and now Tier 2, and upwards to enterprise-grade. Flash is even pushing into three dimensions at the chip level with 3D NAND, which promises huge gains in capacity and performance (Samsung is already shipping a 15TB-plus SSD). Can EMC keep pace?

If past mergers provide any indication, in all likelihood, most attention will be turned inward. The company will most likely be focused initially on paying down the debt that the deal generated, for instance by selling off “non-core” assets, as has been widely reported in the past few weeks (see for example this Zacks article: Dell-EMC Acquisition Deal: How is the Debt Being Financed?) Where exactly does that leave funding for innovation? It’s anybody’s guess.

Why pure-play is passé

The second revolution is even more sweeping in scope, and explains in large part what’s driving the Dell-EMC move in the first place. It’s the movement towards the tighter integration of storage with the other elements of the data center, in particular compute.

In my recent video interview with Calvin Zito, we discussed the market’s evolution away from the days of the pure-play storage vendors. Storage is heading toward ever-tighter integration with network and compute in converged and hyper-converged infrastructures. On board the server itself, innovations like persistent memory enable DRAM-like performance, but don’t evaporate your data if the power blinks off for a moment. Meanwhile, a new category of infrastructure, called “composable” infrastructure, has arrived on the market; it treats storage as a fluid pool of resources alongside compute and networking in one unified system.Today’s flexible datacenter demands not only external storage solutions, but also full-stack offerings across compute, networking and storage.

At least in the short term, the market’s growing demand for a flexible datacenter will most assuredly impact all the embedded relationships that EMC has with Cisco. There is no question that Dell servers will need to replace Cisco gear. In addition, the conflicting software-defined strategies of Dell and EMC will need to be reconciled. All of this will cause turbulence, turmoil, and confusion.

We’re coming to the end of two decades of market domination by pure-play vendors. It’s because of this market direction that EMC could encompass selling itself to a much smaller business with relative strength in servers. But given Dell-EMC’s weakness in networking, it remains to be seen whether the move will accomplish what it set out to do.

How to prepare for the acquisition if you’re an EMC or Dell customer

Customers of Dell and EMC need to prepare for the possible impacts on customers and how they should handle them.

It’s logical that if you don’t already have a multi-vendor storage strategy, you will want to think about one as an insurance policy for your business.

No-one’s going to faint with surprise if I recommend considering HPE as one of your technology partners. I will (gladly) point out that HPE already offers a breadth of flash and server-based storage, as well as converged and composable infrastructure, that Dell-EMC can only aspire to. But you don’t have to take my word for it; you can view HPE rankings in the analyst reports and storage performance benchmarks in this blog.  

Dell and EMC are heading, somewhat belatedly, in the right direction to join the world of full-stack IT providers. But with some sobering analysis, it’s clear just how rocky that road is going to be for these vendors and – more importantly – for their customers.

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