More Motives behind EMC’s Sale to Dell: the Third Platform



Server market shrinkage

Previously in this series, we discussed Dell’s (DELL) buyout of EMC Corporation (EMC), which was announced on October 12, 2015. We also discussed the factors, both partial and full, that have been plaguing the storage space, leading to the eventual break-up of several leading players like Symantec Corporation (SYMC) and the Hewlett-Packard Company (HPQ).

EMC houses storage, server, virtualization, cloud, and big data under its federated business model. EMC also leads the enterprise storage space with a 17.4% market share, as the graph below shows. Hewlett-Packard and Dell follow EMC with 14.6% and 10.2%, respectively, of the market share in 1Q15. Other leading players include NetApp (NTAP) and IBM (IBM).

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IDC (International Data Corporation) in its 2015 Tech Outlook conference stated that third platform—which encompasses mobile, social, cloud technology, big data, IoT (Internet of things)—technology is expected to grow by approximately 20% by 2020. On the other hand, the second platform, which encompasses client and server businesses, is expected to shrink by 3%.

In 2014, IDC stated that it expects the third platform to drive ~90% of the “$1.5 trillion-IT market growth” from 2013–2020.


Threats to traditional storage players

The commoditization of computing hardware, which includes the traditional enterprise storage arrays, is under threat from new emerging storage technologies like converged storage and software-defined storage. The IDC predicts that software-defined platforms will grow faster than any other market segment in the file- and object-based storage market. But traditional storage still constitutes the bulk of EMC’s business, which is facing a threat as flash driven storage technology is rapidly making inroads. An example of a leading player in the flash storage space is SanDisk (SNDK).

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In the next part of this series, we’ll look into Dell’s leveraging plans for its proposed acquisition of EMC.


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