Dell / EMC Merger - Video Surveillance Impact

Dell and EMC are expected to merge. What, if any impact do you foresee on the video surveillance market?

Dell is spending ~$65 billion on EMC.

Some general pro and con claims of the deal:

"Mr. Dell and his counterpart at EMC, Joe Tucci, argue that sticking with the one-stop-shop business model would help it draw corporate customers eager to buy servers."

"EMC itself has been criticized by investors for its so-called “federation,” a collection of businesses that range from data storage to networking to content management, though its management has largely rebuffed calls for a total breakup of the company."

Btw, in a bit of irony, the same hedge fund that is blocking the delisting of Axis is also a factor here:

"Since last year, EMC has been under significant pressure from Elliott Management, a $27 billion hedge fund with a track record of shaking up tech companies that it believes are underperforming."

I was under the mistaken impression Dell had bought or merged wtih EMC a long time ago. But we don't use them and haven't run into security systems on Dell products in our neck of the woods except for customer viewing stations.

Very interesting article on the topic today. I thought it could help enlight the discussion.

With a title like "Dell. EMC. HP. Cisco. These Tech Giants Are the Walking Dead", you know it is not going to be positive. After criticizing these companies, the author summizes, "All this is why IBM, HP, EMC, Dell, and Cisco are fucked."

To play devil's advocate, they are still 'walking' and the surveillance industry is fairly conservative, so the death of any mainstream trend tends to take longer here.

The bigger thing to me is that startups in the video surveillance storage space have not really shown why one should defect to them. Pivot3 is the most 'successful' relatively speaking and they still are a fraction of the overall storage market, despite $100+ million investment. To that end, I see Dell, HP, EMC, etc. still being major server / storage providers for surveillance for years to come.

This might impact the surveillance or the market strategy but not directly. Cisco is using their servers and the EMC storage along with VMware in their project including the surveillance projects. I think in the long term Dell will break this relationship.

Interesting article: How Dell’s Weak Performance Could Affect Its $67 Billion EMC Deal

Net/net: Dell is unprofitable and becoming more so.

A few key excerpts:

For H2 2015, "Dell had a net loss of $768 million, compared with a $570 million loss in the equivalent period a year earlier. Revenue was also down, falling to $27.5 billion in the latest six months, from $29.5 billion in the year-earlier period. The company’s gross margin — or revenue minus the costs related to making its products and delivering its services, expressed as percentage of revenue — declined to 17.1 percent in the first six months of the most recent fiscal year, from 18 percent in the same period in the previous fiscal year."

"Although Dell is making a loss in its income statement, it is generating positive cash flows from its operations. Still, the $733 million generated in the first six months of the latest fiscal year is well below the $1.16 billion recorded in the same period a year earlier. And in the latest period, Dell appears to have squeezed more cash out of sources than it might be able to repeat, such as by pressing its customers to pay more quickly."

Can EMC help turn this around? Will they drag each other down?

Far tougher business even than video surveillance :)

Tougher and possibly an omen of things to come. This is a good look at an industry that has raced to the bottom.... and found it.

There's quite a few comments here (and the industry in general) about the 'race to the bottom' and while I can't comment on the merger (I'm an EMC employee), I will say that EMC sells more $ worth of storage into pure video surveillance opportunities (that is, the storage sale isn't a carryover from some other 'workload' the customer is using EMC for) than what most of the biggest VMS's make in yearly revenue. Further, this business continues to grow.

As to the 'dying' nature of EMC or other large IT companies, I think it goes without saying that there is a clear trend in IT that sees more use of cloud technologies and less use of 'on premise' technology. Again, I can't comment on anything Dell related, but for EMC's part, we have introducted new technology that actually facilitates this move, despite the potential for cutting into our traditional lines of business. I'm not saying that EMC or other large companies are the future of IT, but I think that declaring these companies the 'walking dead' is a touch dramatic.

"I think that declaring these companies the 'walking dead' is a touch dramatic."

In fairness, that article is talking about those companies in the broader IT market context. I still think it's somewhat overstated but it was not focusing on video surveillance, a very tiny sliver of overall IT spending.

"I will say that EMC sells more $ worth of storage into pure video surveillance opportunities (that is, the storage sale isn't a carryover from some other 'workload' the customer is using EMC for) than what most of the biggest VMS's make in yearly revenue."

Well, VMS companies like Genetec are selling software at 90+% gross margins. EMC is selling hardware at far far lower margins but much higher top line. It's really hard to meaningfully compare the two.

I don't remember if I first saw this article on IPVM or not,

How the 'value trap' squeezes Windows PC makers' revenues and profits

But it's a good one on the shrinking profitability of the large computer makers, and I don't think too far from the ancillory products (printers, storage, monitors and other misc peripherals...).

I am also an EMC employee and my personal opinion is that this only makes EMC more relevant to the surveillance market. If the deal closes, Dell and EMC would jointly be able to offer a very compelling end-end solution for the surveillance market that is increasingly moving to the Datacenter. #1 virtualization platform, servers and #1 storage company combining can't be a bad thing for customers and partners.

Just like Cisco Surveillance has been successful...? Good luck. I have yet to talk to a big name IT brand manufacturer's sales rep and have them understand the needs of the security market; they keep equating features and capabilities with the IT market. I'm not saying it can't be done. What I am saying is there has been little if any apparent effort to learn the specific needs of the security market, meet those needs, and then train their sales people in what those needs are and to articulate how they can be met by the product they are selling.

Luis, you should check out what we have done at EMC. We have spent a ton of time partnering with the surveillance market. Our hope is to be additive to the market. We are focused on building the most open, validated and scalable surveillance storage platform.

I still appreciate your time and comments so far. I would just submit EMC should work on their tech literature, because I have heard little if anything on it. Last thing I saw was a webinar sometime last year that talked big on storage for surveillance, but was 90% fluff and very little straight forward mechanics about why it was better. Maybe because it was on an IT forum and aimed more towards potental end user decision makers. But before anyone plops down $50K or more on a storage system, they are going to run it by their technical staff first and they are going to want numbers, not marketing fluff, to justify the cost.

Please, that is with all due respect for EMC as an established, premeir storage provider which is undeniable.

Luis, solid feedback. We currently provide over 21 different detailed reference architectures, sizing guidelines and implementation guides for the top VMS providers. We were Milestone's top storage partner in 2015. These documents are all technical and are very detailed. We also have 2 dedicated surveillance labs where we have engineers that perfom this testing as well as regression testing on virtualized and non-virtualized environments. We have dedicated design tools for quoting surveillance storage based on this performance testing. We offer a surveillance TCO tool as well. We have been doing this testing for over 10 years and I would say we are the gold standard for surveillance storage documentation. We also showed over 1,000 cameras and 1.5PB live at ASIS this year.

I hope this helps. Please feel free to contact me directly if you would like further information.

"We currently provide over 21 different detailed reference architectures, sizing guidelines and implementation guides for the top VSM products"

Link to these?

Sure. I was not sure if we were able to put links. I did not want to make my reply a complete commercial.

Giving evidence to your claims makes it less of a commercial, not more.