3 Scenarios for Dell Software Business after the EMC Acquisition

Some companies have a huge impact on the state of software business. Dell Corporation is one of such companies. The recent bid by Dell to acquire EMC popped up meaningful questions for the whole industry. If the merger goes through, what does that mean for the users of a number of the products that Dell has acquired before?  Dell has mentioned that it would be spinning off some of its acquisitions.  What that means is that Dell and EMC have a vision where they want to be, and will either get rid of or do something with those products they’ve acquired that don’t fit that vision.

With the announcement of the attempted bid to acquire EMC, three possible scenarios quickly developed.

1. Dell-Based Security Division

The first scenario is that Dell would build a big security division.  When we look at its holdings which include SonicWALL, Quest, and maybe even AirWatch looks like dynamite on paper.  But what usually looks good on paper just might be a little more difficult to achieve in reality.  The mix would include SecureWorks as well as a number of other acquisitions. That doesn’t mean these projects will be 100% away from Dell.  It’s publically traded meaning anyone with the money can buy shares in this companies. SonicWALL, Quest, AirWatch are the products that have always been more a darling of the Small and Medium Businesses.  It’s easy to see it also spinning back out into its own, again with Dell holding the controlling interest.

2. EMC-Based Security Department

The second scenario is one that’s pretty simple: Dell builds a security department from RSA Security that is part of EMC business now.  What was just one of many products becomes a serious offering to the consumer.  This is a possibility considering that comments have been made that security is something Dell is striving for.  In numerous talks given, RSA executives have talked more and more about cloud security, a market that’s only going to grow.   The main issue here is that it’s charting an entirely new division and rewriting the way Dell does business.  That takes time, commitment, and money.  While RSA does make money currently, is it enough to justify growing into something that might take several years to achieve and with no guarantee of a return.

3. Spining Off

The final scenario has a degree of potential but might involve a little risk.  Dell’s buying EMC, a company that has vast interests in storage as well as holdings like VMware, VCE, RSA, and Pivotal.  Of course they want to position themselves so they can better compete with the likes of HP Enterprise, IBM, and Cisco.  So what happens to those parts that don’t fit that vision?  Will RSA, Quest, SonicWall go off into its own orbit as a publically traded company, but with Dell still holding it close?  It will probably take years for this happen while Dell evaluates how everything is meshing, and begins to understand better how their efforts are shaping up.  It took several years for SecureWorks to spin off.

So, what does all this mean to you, the customer? Looking at some mergers that have occurred, there might be a decline in customer service.  If you’re the customer, then this becomes a real nightmare.  Sometimes support staffs are shuffled about, or in some cases, even eliminated as one support staff takes over for the other.  That means longer resolution to routine issues as well as loss of experienced talent.

To make a conclusion, it is pretty clear that Dell and EMC merger is the most debated story of 2015.  The Dell/EMC combination creates a storage giant that will have a huge impact on the storage market growth, which as to the latest McAfee report is to increase by 5 times during the next 5 years. However, the questionable future of Dell’s non-core assets is the inevitable side effect of the deal. Possible selling of Quest Software, AppAssure, SonicWall and Perot Systems would help Dell prevent product overlap and get much needed focus and scale to dominate in large enterprise storage segment, but would pose a problem for the customers that have already invested in other solutions. Most likely companies would look for a replacement, which gives the competitors a chance to fight for Dell’s current market share.