Computerworld - A fellow storage analyst was once chided for making the following prediction: Dell buys EMC. Hand me a crosscut saw as I'm about to go out on the same tree, different limb. IBM buys EMC.
The IBM side of the ledger looks like this. Less than a year ago, Bill Zeitler, IBM's senior vice president of systems, made the following statement to a group of industry analysts: In storage, IBM was a good "second choice" to EMC. My jaw dropped on the table. IBM a "second choice?" Never.
As I looked around the room, I sensed general consternation. At the time, I thought Zeitler was giving the storage group a swift kick in the pants for not making its numbers in the previous quarter; that was most likely the case. However, I could feel the collective pain of the storage group. They're bright, energetic people who work incredibly hard -- maybe too hard.
Turnover among the leaders of the IBM storage group is rampant. Kicking them in the pants in public is not what they need, because they're already doing it to themselves in private. They need an extended period of stability that IBM senior management is probably not prepared to give them.
Now for EMC. Pull up a graph of EMC's stock price for the past five years. It's a hockey stick pointed in the wrong direction. Hey, Wall Street people, what's the deal here? It seems to me that Joe Tucci has done everything a reasonable man could be expected to do to improve shareholder value. He's made some brilliant acquisitions (VMware was a stunner), brought in senior-level software talent and transformed the company from a pure storage vendor into something that is unique in the market place. Ah, but that uniqueness may in itself be the problem. Wall Street doesn't have a market-sector bucket to put the new EMC in. Plus, the storage bucket it was once in isn't highly regarded by the big players. Quick, give me the name and date of the last successful storage IPO. Still thinking?
It seems that no matter what Tucci does, EMC's stock price remains stuck somewhere between $11 and $15 per share, where has been for the past four years running. EMC may be worth now as much as it ever will be. IBM may see a reason to buy, and EMC may now have a reason to sell -- not because of a lack bright people or great products on either side, but because it's just the way things are.
John Webster is senior analyst and founder of research firm Data Mobility Group LLC. He is also the author of numerous articles and white papers on a wide range of topics and is the co-author of the book Inescapable Data: Harnessing the Power of Convergence (IBM Press, 2005). Webster can be reached at jwebster@datamobilitygroup.com.
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