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Comment by chollida1 | Hacker News Reader

The new company services 98% of all fortune 500 companies. That's a pretty incredible reach. And 140,000 employee's. If I were a betting main, I'd expect that number to drop in the very near term.

Selfishly I'm very interested in following a private Dell,as tech tends to lead to huge companies in monopoly/winner take all verticals. Dell being private is a decent case study to see how well a private company does against its public counterparts, specifically wrt short vs long term investment.

If you were wondering how the new company is doing post merger...

Moody's just upgraded Dell's credit rating from Ba2 to Ba1 following the merger. They claim that even though the new entity has significant amounts of debt and leverage, its overall credit profile has been upgraded.

The tracking stock, DVMT, that EMC owners were given has traded pretty well since it was released, it's slightly up, so atleast people who want out of the new entity have an easy avenue.

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The real opening EMC has is now being able to sell directly, effectively cutting out the Partner channel which EMC has cultivated over the years and which is why it costs so much by the time you am me go to buy storage. This is where that credit will come in handy. But really how many companies have DIED after being acquired by Dell, Compellent, Sonicwall, Quest SW, and now VMware/EMC. This is where things go to die and I hope very much for VMware's sake that this is not the case but history is not in their favor.

God, so correct. If you are an employee of a company that gets acquired by EMC, consider finding another job!

I'm a long time VMware employee who left several years ago, and I have to respectfully disagree.

VMware thrived under EMC.

Diane was able to keep VMware at a relatively safe distance away from the mother ship, all the while effectively using EMC's direct sales and channel partners to increase sales by something like two orders of magnitude. Plus she was able to convince Joe Tucci to do the spin-off IPO which unlocked a huge amount of value. Not all M&A's are the same.

VMware had a very select agreement with EMC at that time. I am sure that Dell will respect that but the same was said of Compellent but it was effectively taken out of the storage race once the support model reverted to something more Dell like. There is a reason that EMC is under-represented at the board level.

Pivotal is doing pretty well in the pantheon, as is Virtustream.

The trick is not to get integrated into EMC proper, I think.

What's remaining of Quest/Sonicwall/Dell Software was sold a few months ago.

This is a very ignorant statement on a variety of levels. The cost of storage sales is high enough that the likes of EMC, HPE and NetApp fight for channel partners to offload their sales of anything but the largest deals. Acquisitions admittedly seldom go well, but EMC doesn't have a bad record, considering.

> services 98% of all fortune 500 companies.

So it's a short list of ten for the other 2%. IBM, HP, ... ??

(Clarification: the ten who don't buy from Dell+EMC. Just curious about that. Direct competitors is my first guess ...)

No, because large companies buy computing goods and services from more than one business. There will be significant overlap.

AAPL.

This was reported a few years ago and may no longer be the case but they have aparently bought EMC storage in the past - http://www.crn.com/news/storage/229401100/report-apple-buys-...

I believe iCloud runs on Isilon

They service those companies as well. Most of the fortune 500 don't buy one server or one storage system. They buy many of everything, and reward the best vendors with larger portions of their data centers, not exclusivity.

It wouldn't be uncommon for a Fortune 500 to have no Dell or EMC.

It would be a very unusual Fortune 500 that has no VMWare.

Alphabet? I dont think they have any dell, emc, or vmware equipment.

They're pretty unusual.

I'm not sure why you got downvoted - the number of companies that are in the Fortune 500 and would run purely with KVM, Xen, or other non-VMWare hypervisors is pretty small.

"Any" is a strong claim. Alphabet has 60,000+ employees across dozens of divisions and subsidiaries, many of which came through acquisition. It's extremely unlikely that nobody, in any of these groups, is using a Dell server or one of EMC's fifty different models of storage arrays. (Or, to be somewhat ridiculous about it, using a Dell monitor or laptop.)

Or running VMWare Fusion.

While at Google, I worked on a Dell workstation. Not everything must be 'n datacenters.

IBM is primarily a services company aren't they?

For the most part our services compliment our products. You could argue we're a products company that also offers services, or a service company that offers products. Either way, I work in services supporting an in-house product. So at the least, we have both.

HDS (Hitachi Data Systems). Average guy on the street may never have heard of them, but they sell a ton of storage to Fortune 500.

> The tracking stock, DVMT, that EMC owners were given has traded pretty well since it was released, it's slightly up, so atleast people who want out of the new entity have an easy avenue.

It's trading at a 35% discount from VMW, which is pretty steep.

> It's trading at a 35% discount from VMW, which is pretty steep.

Sure is, but keep a few things in mind..

1) This is the first time tracking stock has been issued on a public company so there are alot of people out there who aren't really sure what to make of this class instrument yet.

2) You'd expect a steep discount due to liquidity and lack of typical share holder rights. For example, if VMWare did pay a dividend, then the tracking stock would not necessarily have to pay that out to unit holders.

3) EMC paid a dividend. There are alot of funds that bought EMC to get the dividend. They've been forced to sell the tracking stock as VMWare doesn't pay a dividend and the tracking stock won't pay one.

> 1) This is the first time tracking stock has been issued on a public company so there are alot of people out there who aren't really sure what to make of this class instrument yet.

I don't think it's the first time. https://en.wikipedia.org/wiki/Tracking_stock has some examples (although I don't know if those are public companies). I thought I had heard of other examples in the articles about the deal.

> 2) You'd expect a steep discount due to liquidity and lack of typical share holder rights. For example, if VMWare did pay a dividend, then the tracking stock would not necessarily have to pay that out to unit holders.

Sort of. The tracking stock is non-voting, but I'm not sure how much that matters. (You'd expect a small discount for that.) VMware doesn't have a dividend now, so I don't think that should influence the tracking stock price much.

> 3) EMC paid a dividend. There are alot of funds that bought EMC to get the dividend. They've been forced to sell the tracking stock as VMWare doesn't pay a dividend and the tracking stock won't pay one.

Sure, but theoretically VMW shareholders (anyone who thinks VMW is a buy or hold) should be incentivized to buy a bunch of cheap DVMT, propping the price up relatively close to VMW. Why do VMW shareholders think VMW is worth ~$73 but DVMT isn't worth more than ~$46?

The big one, as far as I can tell (I've been reading through the prospectus and the latest dell 10q), is that the tracking stock is actually an unsecured interest in Dell (Dell Class V shares). So, you're exposed to Dell going bankrupt: secured creditors would get the vmware stake if Dell can't pay the ~ $1.6 Billion in interest they owe per year.

I tried to buy DVMT and couldn't get any.

> The new company services 98% of all fortune 500 companies.

How is this not an antitrust issue?

I think that servicing 98% is not the same as 98% market share, and that anti-trust cares about market share. All it means is that 490/500 companies bought at least one Dell/EMC product. I'd assume most also bought at least one IBM/HP product too.

They're not necessarily the only company those 98% use... I'd guess that Dell is already a supplier for at least nearly that high of a percent in some regard.

In the end though, just because you have a near monopoly doesn't mean you're violating anti-trust. EMC already had that reach, even without dell.

Dominating the market is not illegal - anti-competitive behavior is. The former is still possible just by being really good at what you do and how you sell.

Not to mention that nobody claimed that EMC was the only supplier for 98% of the market. As a similar claim, RedHat[1] state that 100% of Fortune 500 banks, airlines, telcos and healthcare companies rely on RedHat. Is it a correct statement? Probably. But does it mean that RedHat exclusively sells to 100% of those markets? Of course not.

[1]: https://www.redhat.com/en/about/trusted

I'm just fascinated by the fact that in 2016 there are still huge companies like this making their money on ancient tech that is insanely overpriced to the alternatives.

(~20 years ago when I started working in software I thought I would eventually get how these enterprise software giants actually were worth it. The more I learn and age...)

In the end I guess what companies like Dell and EMC do is to provide access to tech that otherwise (because of cultural reasons) is not available to non-tech companies. But.. anyway, all of this seems like it's ripe for disruption.

> I'm just fascinated by the fact that in 2016 there are still huge companies like this making their money on ancient tech that is insanely overpriced to the alternatives.

It is basically about switching costs. Even if you have the money you don't want to disrupt your operations because IT is doing a monster migration to different technologies.

I guess what I'm saying is: the companies that are in this situation should hire top-notch developers to solve the problem. But the whole problem is that these companies can't hire top-notch developers because of who they are.

Cough. I work there. :-)

So have you solved the problem (without resorting to other comanpanies extortive pricing for ready-made solutions) or not? :)

I think that's a fairly narrow view of the options. Sometimes you want to focus your company on the markets you are interested in and have cultivated talent to excel at. Not everyone wants to be a software company, or wants to write internal software. Some companies have a division of lawyers, some interface with an external firm. At some point, depending on the work being done, it makes sense to use one over the other. I don't see any difference between that and whether you have your IT department assembling your own hardware and/or developing your own software, or outsourcing that to some other company. It all comes down to how much money it saves, and how many more options it opens up, and how much it increases or decreases operational complexity.

> : the companies that are in this situation should hire top-notch developers to solve the problem.

This is a simplistic view. You can even imagine that all the issues can be solved with free open source development but the organization works in a specific way and changing the way they work, in that scale, involves a lot of risks.

> I guess what I'm saying is: the companies that are in this situation should hire top-notch developers to solve the problem.

Yes, every single Fortune 500 company should just "hire top notch developers". Think about that for second and then think about it again.

> But the whole problem is that these companies can't hire top-notch developers because of who they are.

Top notch developers are neither identifiable nor quantifiable. So that's a fairly unfounded statement.

You've just answered your own question. It makes no sense for a company to hire "top-notch developers" to solve "the problem" that storage vendors have already solved (because they have truly top-notch developers with vast experience in this specific domain).

That would turn out to be way more expensive than just paying what you consider exorbitant prices, and way more risky, i.e., it's not like it's easy to find top-notch developers, and even if a company could hire some, it's very unlikely that whatever they developed would compare well, by any metric, including cost, to what the company could get by buying a ready-made solution from EMC, HPE, et al.

I've heard the "insanely overpriced" comment before - compared to what? The open source/cheaper alternatives tend to be, bluntly, a joke when it comes to the data storage market. They all either have glaring availability or feature gaps that people who champion them try to paint as "not a big deal". It's not a big deal until your fortune 500 relies on it.

even compared to 3PAR or even NetApp they're crazy expensive

You don't buy them for when they work. You buy them for when it goes wrong. At that point EMC type firms will throw engineers at the problem and provide plenty of relationship managers to help you keep your job (sorry, assist in ensuring that your business relationship continues to be mutually beneficial).

No-one ever got fired for buying IBM.

I've been on hours-long support calls with EMC and they acted like every other vendor in the world blaming your month-old firmware and deny deny deny and then "oh my shift is up", so whatever works for you if you want to throw money away.

The difference works more like insurance than tech sales.

In some cases it's because stability and repeatability are more important in many aspects. At the level where enterprises are buying components to interface directly with people on a regular basis (e.g. workstations), having a slightly more powerful workstation (20%) generally does not compute into a person that is 20% more productive, but having a workstation that fails to function 20% of the time can definitely lead to a near 20% loss in productivity. Large enterprise providers leverage knowledge of failure rates over vast quantities of almost identical (comparatively very variances, at least) computers to ruthlessly identify any weak links in all parts of the computer, because their service contracts often make them responsible for these problems. This goes as far as creating their own mainboards and BIOS, RAID firmware, etc. Enterprises take advantage of this for both their initial good stability rate and ease of replacement when there are problems.

To put this in another perspective, the vast majority of people buy factory model cars, maybe with the occasional dealer add-on. People could buy custom made cars, and if it was common enough, they might actually achieve a cost lower than MSRP of what Ford, Honda, Toyota, etc sell, by slapping together the freely available parts (from an industry which would look more like the PC parts industry). The average quality would be a big question though, and I'm not sure a lot of people would be willing to deal with that for their workhorse vehicles, that need to be relied on to get them from point A to point B reliably.

What's interesting is your auto comparison... At around $80k, having something custom built/rebuilt starts to become an option... At over $150k it's absolutely an option.

Though the majority of cars on the road have a street value of under $25k, and/or are under financing. Getting financing for a one-off isn't really possible unless you don't actually need the financing.

At a large level I think it's a matter of how costly to you is if it fails. For an enterprise, there can be chained ramifications to problems (low-level worker has problem finishing some task so manager is delayed in getting some info so division head is delayed in some report and CEO has to wait another day before he can correctly assess a company wide status report which may delay action until an opportunity is lost, etc), as well as an overall reduction in productivity due to problems when hardware or software that serves a lot of employees is problematic. For the average person, a car is a big investment. In both cases the stakes are high (but in different ways). For a single person buying a computer (when so often data is backed up or remotely available and another computer can be used), or even an enterprise buying a company car for an executive, the cost of that component having problems is not nearly as high.

At the point where the failure of the item costs little but the interest in the item is high, it can make sense to go a more custom route.

It comes down to fixed resources and reducing operational costs. Yes, you could write your own iSCSI driver, running against a large distributed drive system, or other interfaces, but people don't. There's also a significant cost difference in manufacturing a run of 10k system boards vs 1M of them. Tooling alone is very expensive, and retooling more so.

EMC in particular is fairly custom hardware and software and still tends to deliver better value and consistency than the competition. EMC offers NAS options that has always been ahead of its' competitors. I say this as a passive observer as I've been in software development more than anything operational for the better part of two decades, but I remember in the mid-late 90's that what EMC offered simply had no competition at that time.

Today, it's entirely possible to build a software system similar to what S3 does in-house, but that isn't always what a given system/application, especially legacy systems, require. Not to mention a black box that's mostly closed vs needing specialized software management in-house. There are operational costs to this.

Using a single EMC device vs. hiring 3-5 FTEs making > 80k (120-150K after employer-side taxes) for 5+ years? That's a few million right there. This is often the trade off that EMC offers.

Dell itself offers consistency in broader terms... the same/compatible hardware across all employees... all the same docking stations, all the same monitors, etc. There's value in that as well.

If I have a business making $100M per day using "ancient tech" that costs me, say, $100M per year, I might be interested in switching to the Lambdarific Supracloud, but my interest level will depend a lot more on the risk of failure than on any price difference.

Dell makes most it's money providing enterprise volume orders of desktops/laptop computers, repair parts, and certifying+insuring people to work on these computers.

EMC also contractually guarantees data integrity with some of it's higher end products/contracts. As does IBM/HP/Oracle. All your FOSS tools don't offer this, so your company has to shoulder this responsibility yourself.

Underwriting insurance on multi-million dollar contracts isn't something you can just disrupt unless you already have the funds necessary to burn all the way though series B laying around on your person. In which case, isn't their an easier idea to execute?

>Dell makes most it's money providing enterprise volume orders of desktops/laptop computers

I wish they'd bring back the E6400/E6500 style of enterprise Latitude laptops, but of course with modern internals. These newer ones are much uglier and the screens are too short.

Economies of scale. Everyone wanted a high def 16:9 display, so the dyes for 4:3 became too expensive. I also miss my visually perfect 16:10, but alias time marches on.

I completely disagree. I'm sorry, but I find it impossible to believe that enterprise IT departments and businesses were jumping up and down for 16:9 displays. Maybe all the stupid consumers wanted them, but consumers are not the target customer for enterprise laptops.

I think it's much more likely that the laptop makers saw an opportunity to save money by going to 16:9 because of the massive growth in 16:9 LCD screens thanks to TVs, because the LCD factories were pushing them for economies of scale.

"I'm just fascinated by the fact that in 2016 there are still huge companies like this making their money on ancient tech that is insanely overpriced to the alternatives."

You're not wrong.

The problem with your point of view (which I share - it is also my point of view) is that you're operating on the wrong layer of abstraction.

These customers don't need a server (or a network or a SAN) - they need business objectives to be met - again, at a very highly abstracted layer.

You're thinking about technology and capabilities and features and configuration options ... and maybe you're even thinking about price ... but that's not the layer they are operating at. They need an airplane to be built. They need a mine to be dug. They don't care about LUNs or stripe sizes or jumbo frames. They do care about contracts and legal commitments and "synergy". And that's why they rely on heuristics like business lunches and enterpris-ey sales guys and CIA guys giving keynotes at RSA.

I don't like working at that layer of abstraction so I built a business that operates on the layer I like to work at.[1] But as much as I dislike the higher layers of abstraction, it would be childish of me to think they were "wrong".

[1] You know who we are.

This a thousand times.

(Also a very constructive philosophy for technical folks, regardless of their preferred operating layer.)

It is solid state will be the first place that EMC has faltered. And it has NOTHING to offer. XtremIO doesn't count because it is going to be deprecated soon and still is not a part of vBlock so its future is sketchy.

DSSD D5 doesn't count too, I guess? And I'm personally working on a new product line that will have an all-flash version as well ("Nitro": http://virtualgeek.typepad.com/virtual_geek/2016/05/emc-worl... ).

Eh? XtremIO is selling like bananas, they're like 40%+ of the all flash market. (I don't work for EMC but I do work in the DellTech federation and talk to people).

Thing is, much of that stuff is transitioning to software-defined storage eventually. But that's what VSAN and ScaleIO are about.

If someone buys a big EMC system, they aren't just paying for hardware and software. They're paying for EMC to also integrate it into their other systems, set it up, train them to manage it, provide custom coding if their environment requires some unusual change, give early access to fixes for problems they experience, etc. There's a support contract with SLA. There's free overnight shipping of components, and field techs that'll fix the hardware for the customer.

Can someone else do it for cheaper? Maybe. Probably. But to a large degree, it's a "no one ever got fired for buying IBM" situation that you'd be fighting against.

Even if it were possible to do cheaper in budgetary terms, it would be way riskier, and that's a serious factor. I think some technologists tend to overestimate the ability of a (non-technology) enterprise to roll their own (without significant risk and overhead) and underestimate the real costs even just from a budgetary perspective. It's apples to oranges.

Lest this be marketing for price is no object, this doesn't mean anything goes. That's where competition is important. And that includes from open source based solutions and smaller players. The key word is "solution." You can bundle up FreeNAS on your own well rested hardware, customized to the customers requirements and couple it with mucho support, hand holding, and SLAs. Oh, and proving financial endurance of thr organization helps too.Then you might at least be comparing something in the same universe.

Fortune 500 doesn't care about saving 20 dollars only to put the other 80 at risk. And rightfully so.

Most of the Fortune 500 still use IBM mainframes, which are still the children of the S/360 launched in 1964.

The interesting questions include: how long does it take to move off them; how reliable is the move; and what happens to your quarterly results doing a multi-year transition?

Another one is: How long is the current CEO going to stick around to manage the process?

Syncplicity basically lets companies have a Dropbox-like product that's run on EMC hardware inside of a company's data center. There's a clear migration path to a 100% hosted solution when a company is ready to let go.

You'd be surprised how many companies consider it in their best interest to run their own servers.

It's probably not ripe for disruption. There's too much furniture to move. And "ancient tech" lives forever because it's a solved problem - one need only develop replacement parts as they go obsolete.

Until you've "done what they asked for" and then have 'em be completely unprepared for the ripple effect, it's hard to explain the phenomenon. The status quo, especially in a low interest rate economy, is a really Big Thing.

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