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Competitive Landscape after Dell-EMC Merger

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Competitive landscape

The Dell-EMC (EMC) merger is the biggest deal of all time in the tech sector and will put the combined company in direct competition with enterprise IT leaders HP (HPQ), Cisco (CSCO), Oracle (ORCL), and IBM (IBM).

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IBM

In 2Q15, ended June 2015, IBM’s revenue fell 15% YoY (year-over-year) to $20.8 billion, slightly lower than analysts’ estimates of $20.9 billion. The company witnessed high growth in cloud, analytics, and engagement, but this growth was offset by a decline in software and hardware.

Oracle

Oracle’s revenue for the quarter that ended in August 2015 fell 2% YoY to $8.5 billion. The company’s cloud sales rose 34% YoY to $451 million, which was offset by a 16% YoY decline in traditional software sales.

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HP

HP’s revenue for the quarter that ended in July 2015 fell 8% YoY to $25.35 billion. While its PC (personal computer) and printer segments saw declining sales, its enterprise segment performed well. The company will split its business into two—one focusing on enterprise IT and another focusing on PCs and printers.

Dell-EMC merger threatens Cisco

All the above three companies offer complete enterprise computing and storage solutions, while Cisco offers only networking equipment, giving other companies an edge over it. The company exited the storage sector in July 2015 due to quality concerns.

Cisco partners believe that the Dell-EMC merger would force the networking giant to look for an immediate storage acquisition in order to remain competitive. They stated that companies such as object storage software developer Scality and all-flash storage array vendor SolidFire are good acquisition targets.

Competition from the cloud

All major enterprise technology companies are struggling with slow sales, as Internet giants such as Amazon, Google, and Facebook have taken the storage sector by storm and commoditized the server market.

It remains to be seen if the merger between struggling EMC and troubled Dell will create an entity that can withstand the cheap cloud storage services.

You can invest in Cisco through the SPDR Morgan Stanley Technology ETF (MTK), which has 2.7% exposure in the company’s stock.

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