In a recent newsletter we discussed the ongoing battle between a couple of the giants of the IT industry. In particular, we talked about the escalating battle between Cisco and HP.
Watch a slideshow of the tech industry’s M&As in 2010
We are going to use this newsletter to discuss a new twist in this battle: Oracle’s possible acquisition of EMC.
There have been a number of articles recently that discussed the rumor that Oracle is interested in acquiring EMC. If that acquisition were to occur it would be remarkable for a number of reasons. One reason is that EMC’s current market capitalization is just over $42 billion. Assuming that Oracle would have to pay around $50 billion to acquire EMC, that would make this possible acquisition a “bet the company move” on the part of Oracle.
Another reason this possible acquisition would be remarkable is that it could have a huge impact on Cisco’s strategy to provide a tightly integrated networking, server and storage solution. As we discussed in a recent newsletter Cisco is partnering with both NetApp and EMC for storage solutions. An example of the partnering that is occurring between EMC and Cisco is the Virtual Computing Environment (VCE). This coalition is comprised of Cisco, EMC and VMware and it has the stated mission of minimizing the risk for enterprises who are deploying pervasive virtualization en route to private cloud implementations.
As we also mentioned in the newsletter in which we discussed how Cisco is partnering with NetApp and EMC, partnering is difficult. We gave a number of examples of how companies that once were close partners (e.g., Cisco and HP) no longer are. It’s not possible to say definitively that Oracle would put an end to the Cisco–EMC partnership. However, it is very reasonable to say that Oracle would likely limit that partnership and focus EMC more on meeting the needs of Oracle. If that happens, Cisco’s strategy for creating tightly integrated solutions would take a serious hit.
It is interesting to take a step back and notice how much buzz there is in the industry about how the future of enterprise IT will be characterized by tightly integrated solutions. This buzz is fed in part by the spate of acquisitions that have occurred and the ones that are rumored to be in the works. However, we are a bit cautious on how quickly this integration will occur. Looking back to the convergence of voice and data, we are struck by how long that took to become mainstream. Tightly integrating networking, servers and storage is certainly more complex than that was both from a technology and organizational perspective. We certainly believe that IT organizations need to be aware of the trend to integrate technology domains and they need to make plans accordingly. However, they should not expect it to be mainstream any time soon.
