back to article HP HUMILIATED by Dell's EMC buy

There are two big losers from Dell's decision to buy EMC. One is you, because EMC and Dell have signalled that they intend to put EMC products in your face when you buy from Dell. Outgoing EMC CEO Joe Tucci repeatedly said that Dell is the number one reseller for all manner of third party products and suggested EMC will enjoy …

  1. Anonymous Coward
    Childcatcher

    The EMC Federation is Joe Tucci's baby and the pieces of it are run by a goodly collection of uncles. Would you let your child marry Meg's daughter? I thought not.

    Middle-finger icon not found.

    1. Doctor Syntax Silver badge

      "The EMC Federation is Joe Tucci's baby and the pieces of it"

      Not the best of mixed metaphors.

      1. Anonymous Coward
        Anonymous Coward

        Mangled metaphors are a feature here!

        1. Brewster's Angle Grinder Silver badge

          They weren't mangled: they're were mashed up.

  2. Yet Another Anonymous coward Silver badge

    If only

    HP had been able to buy lots of strategic partners over the years

    1. Fatman
      Joke

      Re: If only

      <quote>HP had been able to buy lots of strategic partners over the years</quote>

      and squander lots of shareholder value in the process!

      1. Yet Another Anonymous coward Silver badge

        Re: If only

        Destroy a little bit of value in each acquisition - but make up for it in volume?

  3. Doctor Syntax Silver badge

    But...

    If HP's plan was to split into two smaller pieces why would they want to buy EMC & make themselves bigger? It's contradictory unless they wanted to split into two bigger smaller pieces. Still, HP...

    1. Youngone

      Re: But...

      I'm not really sure I'm right, but I've thought of the HP split as being about getting rid of the loss making crap kind of like the "Good Bank, Bad Bank" split they've done in Portugal.

      I'm pretty sure the bit Meg runs will be the bad bank eventually, even if it's the good bank now.

    2. td97402

      Re: But...

      It wasn't about simply splitting into two smaller pieces. It was about HP getting out of the commodity PC and printer business. They viewed it as not sufficiently profitable. The HP board and upper management have had their head up their asses pretty much since the days of Hewlett and Packard.

      1. Mark Exclamation

        Re: But...

        Why would the board of HP have donkeys?

  4. PJF

    HP bought small

    Who else remembers H.P.& P.B.? Buy little, and take a loss.. Now they "split", (I see 2x losses) M. Dell can get caught up.

    "Dude - ya get a Dell-EM-C" (said as Dellemmsee)....

    1. ChaoticMike

      Re: HP bought small

      What on Earth are you talking about?

  5. Anonymous Coward
    Anonymous Coward

    I've always had respect for HP' server people. I have one and it's a rock-solid tank. Good enough to hide behind if bullets are flying too.

    1. Anonymous Coward
      Anonymous Coward

      I concur. During an interestin(!) project in the Middle East three years ago, four of us did just that. A super dome for those interested. When we emerged, petrified, an hour later there were at least five bullet holes/grazes on the installation. I have the photo to prove it.

  6. mevets

    odd turn of phrase...

    "Having backed out of the deal once once, ...."

    Is that the uk way of saying twice; like thousand thousand?

    1. Simon Sharwood, Reg APAC Editor (Written by Reg staff)

      Re: odd turn of phrase...

      It's not a turn of phrase. It's a typo typo. And I'm about to fix it.

  7. Anonymous Coward
    Anonymous Coward

    The slant you've taken on this is quite revealing. You don't think that HP may have chosen not to buy EMC? HP has a much stronger server and storage portfolio than Dell and much more overlap from a storage perspective with EMC. Many argue that this merger doesn't make sense, but an HP and EMC one would have much more overlap. Standard anti-HP bias from The Register. HP and EMC obviously explored some sort of coming together but it never came to pass. I suspect HP is happy for Dell to take this one, having won the one that saved HP's storage business, 3PAR.

    1. Preston Munchensonton

      I suspect HP is happy for Dell to take this one, having won the one that saved HP's storage business, 3PAR.

      Mostly. Their other deal was to avoid purchasing Brocade and simple rebrand those lovely Directors as HP hardware. If form holds, now HP will do something stupid like buy Brocade, or worse NetApp.

  8. Anonymous Coward
    Facepalm

    Why would EMC shareholders allow HP to destroy value, as they always do?

    1. Steve Davies 3 Silver badge

      Why?

      Because once the deal was done and dusted they wouldn't be shareholders in EMC.

    2. Anonymous Coward
      Anonymous Coward

      Why would HP really want EMC? In the decade and a half I've sold storage, I've always reluctantly admired EMC. But in the last few years they have started to look a shadow of their former selves.

  9. Anonymous Coward
    Anonymous Coward

    It's an interesting buy.

    $67bn is a huge sum and about 25 times EMC's annual profitability. That says 1 (or more) of 3 things:

    1) Dell (and their financial backers) have made a huge mistake overvaluing a business that is exceptionally well run but in decline due to structural changes in the industry.

    This would be unusual because financiers are famously more conservative with their own money than with public shareholders' . That suggests they genuinely believe that this is a good piece of business which bodes badly for one or both of:

    2) Employees of both firms who are going to be cut - There must be a huge internal cost savings calculation here. I wouldn't like to be a statistic on anyone's spreadsheet.

    3) Customers who are going to be milked - The main reason for one firm in a declining industry to spend so much hard cash buying up another is the belief that reduced competition will shore up profits for long enough to pay back the investment. 25 times earnings is either a long payback period or a sharp increase in profitability. One way or the other procurement teams are going to have a harder time here.

    The big winner? - AWS. Whatever you think about the portability of on-premise apps into public cloud this is going to accelerate the trend by stemming cost declines in enterprise on-premise IT.

    I'm sure HP were the ones who backed out of the EMC deal. EMC shareholders wouldn't give two hoots about EMC execs wishes if HP offered a higher price. HP, on the other hand, have a base of shareholders who are already pissed off with disastrous big ticket purchases and would likely fight this one just for the sake of it. At the same time there's much more competition between HP and EMC products and, most importantly, HP have a software business that would be alienated. Dell really have none to speak of and EMC are planning to spin off Pivotal so the Dell/EMC merger is much cleaner.

    The price looks $20-30bn too high to me though. Maybe this is Joe Tucci's final act of tremendous management before exiting stage left.

    1. Anonymous Coward
      Anonymous Coward

      "The big winner? - AWS"

      I doubt it - AWS can't even offer a single vendor hybrid cloud solution yet. Azure and possibly VMware will more likely be the winners here in the cloud space.

  10. luis river

    bad buyout

    The main concern of Dell acquisition, is not the overlapping of products, neither if VMware will lose market, not even the integration; but the great debt that acquires that it will suppose a payment of 2.5 billions $ a year, will need more than 25 years to cancel it, this ballasted R&D, the recruiting, the purchase of companies and other investments; HP didn't buy EMC in a wise decision that leaves it free the hands to define and not to mortgage the future that wants, Meg Whitman of HP will make purchases with more sense. Well Meg!!!

  11. Anonymous Coward
    Anonymous Coward

    $2.5B in interest before you even start posting a profit

    Yup that's right ... $2.5B (or there abouts) off the top before you can even start investing in your strategy. No wonder DELL de-listed the company ...

    HP had the years of non-investment in the "Hurd Years" and its taken many more for the company to get back on track. Meg has turned HP from a sinking ship to a company with a clear strategy and significant investment in R&D. The only reason why HP would want EMC would be VMware. They didn't need any EMC technology as HP's investment in 3Par has proven to be a very sound investment.

    They didn't get pipped at the post by DELL, they made a strategic decision not to throw the company into disarray. HP is at the end of their transformation - DELL, EMC, VMware, the channel and their customers are at the beginning of a very long road of confusion, chaos and reorganization. Good luck with that....

    So again ... how did HP get humiliated by this deal ? Or was that just a shock tag line to insight anti-HP trolls to The Reg once again ...??

    1. Anonymous Coward
      Anonymous Coward

      Re: $2.5B in interest before you even start posting a profit

      "Yup that's right ... $2.5B (or there abouts) off the top before you can even start investing in your strategy"

      They can offset that by selling the dross that they don't need to some gullible company. HP spring to mind...

    2. ToddR

      Re: $2.5B in interest before you even start posting a profit

      What position do you hold at HP AC?

  12. Matt Bryant Silver badge
    WTF?

    WTF?

    "....The second loser is Meg Whitman and HP Enterprise......" So Chris Mellor has already pointed out the overlaps that made the deal unattractive to HP (IMHO, without VMware being in the deal there was little of value EMC brought to the table), and Dell has to already resell lots of the EMC kit to fill some of the gaps in their range so a tie-up is sensible, but somehow that is translated by Simon Sharwood into a loss for HP?!?!?!?!

    About the only positive out of an HP-EMC deal would have been HP buying some market-share, and Meg doesn't seem to have thought the price Tucci wanted was enough for the gain. Dell on the other hand needs EMC to try and be competitive with what HP already offers.

  13. Anonymous Coward
    Anonymous Coward

    Good choice to stay away...i hope

    From the bottom of the pile within HP (and soon to be HPE), i think this is a safe choice not to go after EMC. HP have done significant work to repair the balance sheet that last 2-3 years and it's in a decent enough shape now...an EMC purchase would have been e (to the power) Autonomy in terms of impact. Not that EMC books are cooked but just the time and effort required to create a baby you'd choose to hold and be willing to look at.

    Servicing the debt (the 67B tag currently is greater than the market cap of HPE, btw) apart, there'd be hardly any money for meaningful Dev which would invariably mean bean counters making technology choices. The amount of product portfolio duplication is massive that this in itself would mean significant HC reductions here (mostly, me thinks) or there.

    Going to sleep hoping the HP (HPE) board is not dreaming up a 80B tag. Hope this deal closes sooner than mid FY16.

    For once, we should go by what customers/employees gain by rather than some wet dream a wall street guy's having. HP has satisfied one too many of those in the past and we should now just focus on smaller strategic fits to fill out the picture.

  14. elan

    DELLMC

    well , not that complicated:

    1) HW=DELL

    2) SW=EMC (existing storage HW_products will evaporate in the all-flash/x86 jungle)

    3) Leadership=MD

    4) R&D=>VC based companies (interest rates=>captital owners=>VC=>invest in new stuff)

    the sky is bright, not cloud..y ..

  15. Anonymous Coward
    Anonymous Coward

    The Hamster-Goldfish Scenario

    Many parents will be familiar with the natural cycle of the small pet, for example a Hamster or a Goldfish. Much loved for what the to child seems an eternity, there comes a point where the interest fades. The pet still needs caring for and the household probably pretends more affection remains that genuinely does. No one is prepared to admit the Hamster or Goldfish will soon be heading to the great cage/tank in the sky. (Sometimes these once loved pets hang on in for years …)

    This bring me to Dell | EMC. They seem similar; both aggressive and once very successful sales machines. The problem is they are as different as a hamster and a goldfish. Dell is at it’s best with home/SMB. EMC is still at heart a direct large enterprise customer culture. Fusing the two is like trying to graft a no longer loved Hamster to a no longer loved Goldfish and thinking this with some how revive interest in both poor creatures.

    The startups and likes of SuperMicro will be raising a cheer at this news. I hope my former colleagues don’t find the Dr Moreau process too painful.

    Disclosure: I have worked for both Dell and EMC.

    1. MyffyW Silver badge

      Re: The Hamster-Goldfish Scenario

      Interesting, if slightly unpleasant analogy @AC

      Disclosure: I've owned both a Hamster and a Goldfish. They've lasted longer than some of the server kit.

      1. Anonymous Coward
        Anonymous Coward

        Re: The Hamster-Goldfish Scenario

        Having worked at both I wanted to give it a couple of days thought. The more time I gave it the more examples of unpleasant outcomes from past mergers I came up with - from DEC & Compaq to AOL & Time Warner. I think it will mostly be unpleasant, but the decline of once vibrant corporations is, whether merged or separate. The tricks they had were slick supply chain when others didn't and Symmetrix. The first is no longer enough on it's own and the second is in accelerating decline. EMC was already it's own main competitor (be your own disruptor BS). 9-12 months of waiting to see which of VNXe, VNX, EqualLogic and Compellent will get the chop will help everyone except Dell | EMC. For this segmentI think with some investment the Dell products might be a better platform than the EMC ones, but they will probably end up trying to put some lipstick on the VNX. Dell have resold that technology twice before with a degree of success. Third time a charm? Starts looking more and more like Burton and Taylor.

      2. Michael Wojcik Silver badge

        Re: The Hamster-Goldfish Scenario

        Disclosure: Igor and I created a hamster-goldfish chimera. Growth was flat.

  16. Charles Smith

    If HP had bought EMC

    If Meg had succeeded in buying EMC we'd be hearing in two year's time that EMC had been greatly overvalued and Joe Tucci had been using false accounting. Meanwhile all of the good ex-EMC bodies would have fled before the blind ghost called Redundancy swept them away.

  17. Anonymous Coward
    Anonymous Coward

    10's of thousands of families are going to be massively disrupted as HP and EMC slash their payrolls in response to the changes going on in the world of IT.

    Nearly all of them will be "upper-middle class" professionals in the top ten percent of income earners in the U.S. because of this, they will get sympathy and support from no one. Many will never be able to duplicate their current earnings if they are over 35 years old.

    When the paycheck stops, a lifetime of savings will begin to go down the drain. Unemployment benefits are meaningless when they don't even cover the mortgage.

    The envious and spiteful will be gleeful to see this happen.

    I wish everyone well as they navigate this major change.

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