Why EMC Should Have Bought IBM's Server Business

By now the news will be out – Lenovo are buying IBM’s X Server business. But what would happen if things had been different and EMC made the first move?

I’m sure many of you are thinking that this strategy would make no sense, but bear with me for a moment. Firstly let’s look at EMC’s business as it stands today. The storage business is being attacked on all fronts and it could be argued that EMC is at an inflexion point. We see converged and hyper-converged solutions increasing in popularity. The former means EMC is in competition with Hitachi and HP, both of whom sell converged systems in which they own the hardware. For the latter, these solutions don’t even require separate storage hardware.

The move to convergence means the mega-array (e.g. 4PB VMAX solutions) is less attractive. The economies of scale in deploying large monolithic infrastructure is being outweighed by the disadvantages including difficult change control process, managing downtime, balancing performance and migrations onto new hardware. The storage pendulum is swinging firmly back towards distributed storage again.

How could EMC counteract this? They have started already, as we know. From a purely storage perspective, they are attacking the all-flash market with XtremIO, admittedly from the position of follower rather than leader. We’re starting to see the emergence of software-only solutions too. These include ScaleIO, providing distributed storage, and talk of virtual machine versions of existing products. There is also a move to sort out the management/orchestration piece with ViPR. Note that some of these pieces have already been delivered by other vendors, notably HP with StoreVirtual and their OneView software.

What would server hardware bring? EMC already knows a lot about the hardware business, selling storage arrays and being part of the VCE coalition. However that partnership is somewhat rocky and Cisco could easily go it alone, having acquired Whiptail to add the storage component to some of their offerings. This could start to chip away at the high-end sales of VCE and allow Cisco to develop high-IOPS solutions without EMC. If EMC acquired IBM’s storage business they would get the ability to deliver their own converged solutions. They could even buy Brocade to fill out the fabric piece and have no dependencies on other partners at all.

The Architect’s View

EMC are in both a very strong and weak position. They own most of the jigsaw pieces and could have owned a significant part of the converged solutions business. With a bit of boldness, they could have acquired server technology and transformed themselves into a provider of private cloud solutions, delivering the hardware and potentially in the future, software versions of their existing products. ViPR could sit over the top, managing the whole thing, giving EMC what they want more than anything – account control. Future acquisitions then simply slot in and offer services where there are gaps, such as scale out object storage.

Alternatively, they could do nothing and assume the storage business alone will sustain them. However, many companies that have come and gone before assumed their business model was impenetrable and suffered as a consequence. We only have to look to Nokia and BlackBerry to see how quickly the fortunes of the market incumbents can change.

(Note: this post was written before the Lenovo announcement – literally minutes before – and has been amended to reflect current news)

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