He estimates that VCE does about $1 billion in sales annually; it hasn't grown more, he thinks, because VCE is a partnership rather than a "real company," making customers wary. “Dell now has an opportunity to create a truly unified equivalent, and to do it better,” he said.
Del Prete sees a more pragmatic path from Dell. It can’t match what Cisco brings to VCE in terms of network equipment, he said, so he doesn’t see any big changes in the near term.
“I would expect Dell to try to capture more value from those deals, but Michael is a savvy guy, he knows that to have the best-in-class networking and that he needs to work with Cisco," he said.
What does the acquisition mean for rivals?
Even if the VCE partnership continues, Cisco is looking at a very different competitive landscape moving forward, and that will spark internal discussion about its long-term strategy.
“I don’t see anything imminent, but they need to think hard about who they partner with and about potential mergers moving forward,” said Del Prete.
“Converged is the order of the day, which means Cisco has to think about how they build those systems and who they partner with, because EMC is not the same company it was last night,” he said.
As for HP, it would have dwarfed a combined Dell-EMC, but it chose to split into two companies on Nov. 1, and HP Enterprise will now be a smaller entity. CEO Meg Whitman put a positive spin on the news, telling employees in a memo that Dell will be paying $2.5 billion in interest alone to complete the deal, according to reports.
But the deal only increases the pressure on HP to show it can grow its own business.
"This deal probably accelerates HP Enterprise's timetable for meaningful acquisitions, because the music's going to a faster beat now," said IDC's Del Prete.
Analyst Rob Enderle, who's been critical of the HP split, was far less sanguine. "If this goes through, HP is totally hosed," he said in a blog post. "Dell would appear as a far more complete vendor than HP, and with HP’s crippling layoffs its customers will quickly be looking for enterprise class alternatives."
Will there be layoffs at Dell-EMC?
Some cuts are inevitable, but perhaps not as many as you’d think in a deal this size.
“There are certainly some cost synergies, we’re not going to tell you there aren’t, but there are other companies in the industry that are much better at reducing headcount," Michael Dell said, a bit sarcastically, on Monday's conference call. He was likely thinking of HP, which has already cut 55,000 jobs and will now eliminate as many as 30,000 more. A big difference with Dell is that it's a private company, so it's not under as much pressure as HP to cut costs.
Sign up for CIO Asia eNewsletters.