CSPs, Mergers and Acquisitions

Dell Buys EMC: Big Service Providers Are Next Battleground

As Dell buys EMC and a stake in VMware for $67 billion, the deal will potentially accelerate major IT shifts within corporate data centers and across big cloud service providers.

Indeed, enterprises are striving to consolidate and converge their data centers -- through a combination of servers, storage and networks that are designed to work more closely together.

At the same time, many of those corporate data centers will gradually shift to software-defined data centers (SDDC), extending virtualization from servers to storage to networking. The idea is to create a nimble application economy -- where services can be turned on, turned off and optimized far more rapidly.

The same shifts are occurring out in the service provider markets, where telcos, big IT providers and cloud services providers are seeking to standardize their infrastructure in a way that speeds IT automation and application activation.

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That's where Dell's buyout of EMC enters the picture. In theory, the Dell-EMC combination could be attractive to data center providers and cloud providers that want servers, storage and networks from a single vendor. But that opportunity also comes with challenges. Chief among them:

1. Timing: Dell and EMC don't expect to complete their business combination until May 2016 at the earliest. That leaves the doors open for rivals to promote alternatives long before Dell and EMC hit their stride on product and sales integration.

2. Entrenched Competition: Cisco and several other hardware suppliers are already in the market with "single vendor" solutions for the data center.

3. Open Alternatives: Many of today's biggest clouds run on commodity, home-grown x86 hardware. Facebook, Google and others promote more and more open standards that other data center builders and providers can potentially leverage. That means high-end hardware from EMC, Oracle, IBM and others will continue to face commodity pricing pressures.

Still, Dell and EMC have strong relationships across the enterprise and service provider front. We'll be watching to see how those relationships evolve amid today's big M&A deal.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.