Data Storage Industry: "Intense Vendor Jockeying": Page 2

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EMC, NetApp as Takeover Targets?

Speculation is rife that EMC is about to be snapped up by Cisco, rumors that have been around in one form or another for some time but have gained steam with the rapid consolidation and change that has swept the IT industry this year.

The argument appears to be that EMC is only taking in $15 billion a year in sales, so that leaves it far behind the likes of Microsoft, Cisco, IBM and HP, and perhaps not big enough to become dominant on its own as the IT stack becomes integrated.

EMC, for one, doesn't buy that argument.

"We are not for sale, and we see plenty of opportunities for growth," EMC CEO Joe Tucci said last month. "We are looking at opportunistic acquisitions to consolidate and strengthen our competitive position."

To survive, Mann suggests that EMC needs to ramp up its VSM capabilities, either through partnership, OEM, or acquisition. The company could possibly build its own offerings using its existing elements for capacity, performance, network automation, storage efficiency and security.

Peters predicts that a lot of the little guys and startups in storage and other IT spaces will be snapped up faster than before, as the fewer, bigger brands jockey for position. Where does this leave the 'mid-size' storage companies? He thinks that EMC and NetApp are both in a perilous position.

“It seems almost odd to discuss NetApp and EMC as companies that might not be around as we know them.”

— Mark Peters

"It seems almost odd to discuss NetApp and EMC as companies that might not be around as we know them," said Peters. "NetApp is the more vulnerable on a purely logical basis."

Webster concurs that NetApp is a more likely target. But he also places Brocade on the potential acquisition list. As for EMC, he thinks the Cisco partnership works even without EMC being gobbled up. But the company could be pushed over the edge by its shareholders. He gives the example of the ongoing Broadcom-Emulex drama. Emulex is fighting tooth and nail to avoid the deal.

"It doesn't matter if they want to be acquired or not," said Webster. "If shareholders want it, then that is what will happen. It's the same with EMC."

Greg Schulz, founder of the Storage IO Group consultancy, said he wouldn't be surprised if the Cisco move occurred due to the obvious synergies and the fact that Cisco has plenty of money.

"There are a series of domino effects ongoing, and Oracle buying Sun could be a response to Cisco's recent moves," said Schulz. "If Cisco makes the move further into the blade space, then they probably have to acquire EMC to be viable, as they would have stepped on HP and IBM."

On the other hand, this could be a whole lot of idle posturing that comes to naught. Schulz gives the example of the intelligent switch market that was all the rage several years ago. Brocade bought Rhapsody, Sun acquired Pyrus, and other small vendors were eaten up in a bid to make sure that no one was left out of the party. Yet intelligent switches never really gained traction.

That said, the big IT players will make their moves anyway.

"Companies are converging to gain synergies, so more acquisitions are coming," said Schulz. "The strong get stronger and the weak can sometimes be acquired. Some actually want to be acquired."

Tut Tut, Looks Like Rain

While the cloud may be a big part of the rush toward an integrated stack and next-generation data centers, Webster believes that it won't all take one form.

"IT is never one thing; instead of a single paradigm, there are always different permutations," he said. "Some will want private clouds and others will be happy with buying services outside from providers via infrastructure as cloud. And then there will be multiple variations. Whatever happens, we better get ready for rainy season."

Article courtesy of Enterprise Storage Forum.

Tags: Google, Microsoft, virtualization, VMware, Broadcom

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