Most Dell and EMC Customers Surveyed Welcome Merger

A month after Dell announced its definitive agreement to acquire EMC for $67 billion, making it the largest IT merger ever, it appear customers of both companies feel they'll be better off as a result of the deal. At least that's what one survey of 200 C-level IT execs conducted earlier this month by IT advisory firm Enterprise Strategy Group has found.

The results, published today, show that 75 percent of customers believe the merger of the two companies will benefit their organizations, while 17 percent don't expect it to have any impact. Only 3 percent said they are worried it will have a negative impact and the other 4 percent don't know.

Customers who rely on both companies for their datacenter infrastructure were even more bullish -- 84 percent said they expect to benefit. Of those who were primarily only Dell or EMC customers, 68- and 66 percent respectively, believe the deal is good.

ESG pointed out that the survey was not commissioned by any third party, making the data all that more noteworthy. It's also interesting to note that the top benefit that'll come from the merger is "complete and more innovative solutions," according to 65 percent of the respondents. Rival Hewlett Packard Co. completed its planned split, arguing two more-focused firms would be more innovative. The second largest benefit is that customers believe the two companies will offer more stability combined than apart (58 percent), followed by an expectation that Dell-EMC will provide lower cost infrastructure (55 percent). More than half (53 percent) see using the combined company for complete solutions spanning from endpoint devices to datacenter infrastructure while 50 percent welcome having to purchase from fewer vendors.

One area where customers may not put all their IT investments into a combined Dell-EMC basket is in network infrastructure. When asked about those who procure software-defined infrastructure from the VCE alliance, a majority (55 percent) said they'll buy networking components from EMC and Cisco, not Dell (though 26 percent would purchase components coming from both Dell and EMC).

Once combined, 60 percent say they expect to spend more with the new company while only 1 percent said they'll spend less. The obvious but important caveats to this particular data set are a) many of the questions are clearly predicated upon the transaction actually closing and b) this data represents the attitudes of the current Dell-EMC install base.

"While retaining and growing these customers will be critical to the new firm's success, its aspirations will not stop there," according to the ESG report. "As the new Dell-EMC looks to steal market share from incumbents such as HPE and IBM, and fend off encroachment from cloud entrants like AWS (among others), its ability to foster the levels of interest described by respondents in this brief with these non-customers will be essential."

Some of these findings may fly in the face that when industries consolidate that fewer choices lead to higher prices and deteriorated service (anyone who has flown on a major airline lately can attest to that). I suggested as much to ESG Senior Analyst Colm Keagan, but he doesn't believe that comparison holds. "There are still plenty of market pressures coming from legacy vendors [IBM, HP, Microsoft, etc.], cloud vendors [AWS, Microsoft, Google, etc.] and emerging technology companies [Nutanix, SimpliVity, Nimble, Solidfire, etc.]  to keep Dell/EMC honest," Keagan said. "Plus with the huge debt service on the deal [$47 billion], they can ill-afford to start shedding customers by not over servicing them and keeping them happy. "

The bottom line, he added, is there still will be concerns about how the combined company integrates its sales and engineering teams, ensure any staff reductions aren't overly disruptive and rationalize the product portfolios without leaving clients in the lurch. "But the initial client sentiment at this point is positive," Keagan said. "Execution, as always, will be key."

Are you as optimistic about this merger as the ESG respondents?

Posted by Jeffrey Schwartz on 11/18/2015 at 11:49 AM