The ultimate guide to Dell's EMC acquisition
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Both Dell and EMC have made great strides in the past few years to become more channel partner-friendly companies, although Dell partners are still challenged by the vendor's direct sales force in some market segments. So, what's ahead for partners with today's news of Dell's proposed $67 billion acquisition of EMC?
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No one knows for sure, but given the combined companies' sales force structures -- i.e., selling through both the direct and indirect channels -- how the channel mix plays out will be fascinating to watch, according to Cyndi Privett, principal at Viewpoint Research Inc., in Scotts Valley, Calif.
"I think that both companies have learned that they can't get where they want to go without the channel's assistance, so I would expect to see that play out in a new combined company very well," she said. Although, Privett noted that Dell's direct sales force's presence in some small and medium-sized business (SMB) and midmarket accounts makes it challenging for partners to be effective selling Dell technology.
According to EMC, about 60% of company revenue goes through the channel, as opposed to above 40% at Dell.
Cyndi Privettprincipal, Viewpoint Research
On a positive note, both vendors have solid partner programs, and each company's channel partners have weathered through a number of acquisitions and separations. Just this past January, EMC's overhauled Business Partner Program went live. If Dell has any changes in store for its Dell PartnerDirect program, they're likely to be announced next week at the vendor's PartnerDirect Summit at Dell World 2015.
Kevin Rhone, senior strategic consultant with the channel accelerator practice at Enterprise Strategy Group Inc., in Milford, Mass., expects that when the two companies meld, the impact on the partner base will be additive, rather than a swapping out of partners.
"There are a lot of synergies between the Dell and EMC," Rhone said. He said EMC's relatively high-end storage business, which comes with VMware, combined with Dell's servers and midrange strength will provide "different channels, different go-to-markets [and] different products that I think work well together."
Rhone added that there is not a tremendous amount of overlap in the customer base to which each vendor is aggressively selling.
Gartner vice president and distinguished analyst Tiffani Bova noted that when the companies merge, EMC and Dell partners will have to rationalize which vendor they go with if there is portfolio overlap.
To the dismay of both Dell and EMC, which struggle to get their partners to sell across their entire portfolios, Bova said most partners focus on single product categories -- such as hardware, software and security or PCs, servers and storage.
Or will partners be forced to decide which large vendor they want to hitch their wagon to: i.e., the expanded Dell-EMC or HP, which the combined company will compete head-to-head with.
Dell partners: Differing perspectives
John Powers, CEO of Seattle-based GCSIT Solutions, and Dell partner, said it will be interesting going from being a partner who sold mostly against what is the 800-pound gorilla in the storage market to now maybe selling alongside or with EMC.
"That raises a lot questions like culture, fit, strategy that I'm sure in the hours, days and weeks to come, Dell will help us better navigate," he said.
For Powers, the news of the acquisition also raises a lot of questions about how the two vendor's products and intellectual property will be rationalized when the acquisition is complete; the deal is expected to close in mid-2016.
"The better-together story possibilities for our customers and future customers to have best of breed of both companies is great for strong, well-aligned partners like us," he said.
Peter Castaldi, principal and co-founder of system integrator Kovarus Inc., based in San Ramon, Calif., agreed. In an email, he said, "We think the combination of EMC and Dell is excellent news. Not only is Kovarus one of EMC's leading channel partners, we also have an existing relationship with Dell. This combination allows us to expand our offerings for our customers. We believe that Dell has a strong channel and a reputation of being easy to work with. We look forward to collaborating with Dell on key technology areas, such as digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile and security."
Not all partners would agree with Castaldi about Dell being easy to work with. In fact, Powers noted that while it's clear how both EMC and Dell deal with the top 20% to 30% of their top enterprise customers -- they go direct -- EMC prefers to rely more on partners for midmarket customers than Dell.
"While Dell has talked about giving up some of the market to the channel, it never materialized and is very confusing," he said. "Hopefully, Dell will adopt a more EMC-centric approach to their midmarket, where leveraging the channel isn't just preferred, but is mandated," he added.
It's the customer, stupid
With the EMC acquisition, expect to hear Dell not only continue, but increase the volume on its marketing push as the only end-to-end IT company. At the end of the day, that's window dressing, as transformation in the IT marketplace is being driven by customer choice.
"At the end-user environment, you have guys who are router guys or storage guys or PC guys -- so just like channel partners, you have individual buyers or procurement in each of those categories. Maybe at the very top you have someone who says, 'Would we get more leverage or better pricing with Dell and EMC?'" Bova said.
So, outside of a price play or the tactical integration that companies like Oracle have done with Sun and Exastack, and a "get it all from us message," customers are still buying EMC, Dell and HP, she noted.
Talking about HP, the vendor released a statement calling today's news, "a real opportunity for HP." Taking a bigger swat at Dell, the vendor went on to say that, "While Dell and EMC are sorting out their future, Hewlett Packard Enterprise and HP Inc. will be working to take share and advance our technology leadership in key areas like converged infrastructure, private cloud, all-flash storage, personal systems and printing."
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