The Dell and EMC Way

Can the world’s most beautiful equation, E=mc2 help Dell rediscover and transform its collective futures?

Today’s Brew is for Dell Inc + EMC Corp.
Brew date: 18th November 2015
Type: Served Hot, to be Consumed a.s.a.p.

E=MC2. Considered as the most beautiful, elegant and most simplistic equation that not only governs the laws of nature, but also as well forms bedrock of its existence. The Brew today attempts to inceptualize and extend the gospel discovery to business horizons leading to redefining and unifying various frontiers of technology.

Michael Dell started the computer giant in his Texas dorm room in 1984 when he was just 19 with $1,000. Four years later, it went public with a market capitalization of $85 million. By the time he took it private again in 2013, the company was worth $25 billion.

Ever since Michael Dell bought out his computer company two years ago, he has been trumpeting the virtues of private ownership. "As a private company, Dell now has the freedom to take a long-term view," he wrote in a Wall Street Journal op-ed in 2014. "No more pulling R&D and growth investments to make in-quarter numbers. No more having a small group of vocal investors hijack the public perception of our strategy while we're fully focused on building for the future."

Come October, and Dell, true to his history of disruptions, announced another one, this time only from big to become a much, much bigger private company, agreeing to buy data storage firm EMC for $67 billion. EMC's board approved the merger.

Post that, this is how the big picture emerges out as; Apart from leading in Client computing, Dell has had most of their enterprise storage success at the low and mid-range, where EMC dominates the largest storage systems and does well in the mid-range. This means Dell-EMC will need to rationalize the mid-range. Dell has a giant server business and mid-range networking business, places EMC doesn’t play. Additionally, Dell has enterprise software and giant consulting and services business driven out of their many acquisitions.

The synergies in product lines and services between the two companies are very strong, when it comes to the commercial and enterprise markets, as full solution selling is huge.

To understand business models of Dell & EMC, check out the following links:

The Brew will analyze Dell  + EMC on the following parameters:
a) Business Analysis:

1)    Continuum of Innovation and Change: The Continuum of Innovation has seen a paradigm shift when it comes to Technology. In the present era, Innovation in Tech is more a function of Pull from Consumer end as opposed to earlier Push mechanism deployed by Enterprises.  Effectively, that’s a conjecture as well which triggers to Startup wave given the quick (and pro-active) anticipation of Consumer meta-needs along with desire and capability to disrupt, innovate and change. Consumerism, Continual decrease in Cost of Technology, and Low Cost of Failure are the key drivers for this shift.

Dell’s stronghold continues to be on Client computing, in terms of Business Cycle dynamics, the offerings require a high rate of change in terms of innovation, decreasing wallet share, wide array of similar products and vulnerability to disruption with low entry / exit barriers.

EMC, on other hand has a Stable Business Cycle with its offerings spread to Enterprise segment, where the Tech Enablement Lever grows in linear relation and over a period of time, thus allowing EMC to retain a stable, predictable Business Cycle dynamics with a possible Increasing Wallet share, as Enterprises race to gain competitive advantage enabled by Technology.

With regards to this context, a mix of Dell + EMC results in a high Financial synergy driven by respective models, on the parameters of Growth, Stability, Spread, Size & Rate of Change.

2)    Competence of Dell & EMC: To effectively drive their respective business models, Dell has Enablement Competence in the form of efficient & effective SCM (The Dell Way), whereas EMC has Fulfillment Competence with regards to its Spread across its offerings for the same set of audience. 
Precisely, Dell has a Functional Advantage whereas EMC has Domain Advantage leveraged further with higher spread.

The Brew strongly advises Dell & EMC to focus on their respective Competences rather than shifting focus on altering Competence direction, i.e. Dell shifting from Enablement Competence to Fulfillment one, with being Innovative wont help as the Innovation will disrupt the efficiency advantage of its SCM along with lowering the scales of operations to establish Proof of Concept for Innovation success. Alternately, it will be unwise of EMC to opt the Dell way to shift from Fulfillment to Enablement competence, primarily as cos EMC has Domain advantage, it should focus on Innovation and disruption, even while its business cycle offers higher stability. Infact, for EMC, even if they pursue the trajectory of market defined innovation; it will still end up optimizing its model, as the Consumption Cycles in Enterprises are fairly evenly spread and predictable.

3)    Strategic Direction for Dell & EMC: The Brew believes to amplify its enablement competence; Dell’s Strategic Direction should focus on Design and Consumer Support to improve the Consumer experience and usability.

Similarly, For EMC, the Strategic Direction should be 2 pronged: Redefining itself as Full stack Information Management firm rather than Data Storage Firm, getting a direction for Innovation and most importantly to focus on Integration of its Elemental Offerings & Firms, where EMC has potential to convert its Information Management Offerings (from existing Data Storage company) to a Product, Service (IAAS) & Platform (PAAS) model driving in the disruptive business model innovation for enterprises (triggers market expansion to medium and micro scales as well) based on convergence of its existing offerings and driving in the value proposition of Low / Optimal Cost of Ownership.
Though EMC’s Competence is its spread of offerings across the data / information management continuum, a Convergence led business model innovation can definitely give it an competitive edge disrupting the industry landscape in entirety, along with promoting the new drivers of tech innovation.

4)    Completeness, Convergence, Innovation, Speed & Synergy: The Brew strongly urges Dell + EMC to develop a Complimentary Value unlocking proposition (as explained earlier in above points along with incorporating Dell’s Software businesses) to drive a Full stack offering model with Optimized Total Cost of Ownership across. The Brew would also like to draw to attention that Strategic Acquisitions are done for acquiring competence & unlocking potential rather than Synergies realizations. EMC will have to follow a self – disruption mode from within to drive structural systemic innovation led growth and relevance.

Dell + EMC will have to focus on with a Competence of Innovation, Speed & Completeness to drive the scales and value to being the world’s largest privately-controlled, integrated technology company that will be a leader in the extremely attractive high-growth areas of the $2 trillion information technology market, not just in present, but as well in times to come.

Please drop your comments, reach out on [email protected]
(Disclaimer: All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement.)