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How pivotal were the past 12 months for Dell EMC storage customers? Well, we're about to find out. Given its product cadence during the last year, it's fair to assume the world's largest storage vendor won't slacken its pace at Dell Technologies World 2019 in April.
A lot can happen in a year. Or three. That's how long it's been since server maker Dell and storage giant EMC got hitched in 2015. The $60 billion-plus deal remains the largest IT merger in history. Since then, the EMC identity has been almost fully absorbed into Dell. Dell has strongly put its stamp on EMC (plus VMware, which came in the EMC deal) over the past year. EMC-branded storage hardware has a sustained lead -- and large customer base -- in many product categories. But all of it now bears the Dell stamp and Dell PowerEdge servers play a key role across storage lines.
EMC owns virtually no part of VMware
Nothing illustrates this transition more than Dell's return as a public company in 2018, a move accomplished on the backs of VMware shareholders. Rather than an initial public offering (IPO), Dell bought out the tracking stock tied to its VMware subsidiary -- the crown jewel of the EMC merger all along. Dell's move was made possible by EMC when it originally acquired VMware -- then, a startup focused on server consolidation -- in 2003.
Dell also induced an IPO by Pivotal Software, the cloud-building software and services company that was an EMC division before Dell gobbled up the EMC Federation. Pivotal's spinout netted $555 million, underscoring how Dell has attempted to maximize EMC assets to satisfy massive debt. Other EMC Federation subsidiaries Boomi, RSA Security, SecureWorks and Virtustream remain privately owned by Dell.
During a keynote and subsequent press conference at the 2018 Dell Technologies World, Dell CEO Michael Dell sidestepped questions about the then-ongoing negotiations with VMware. Dell claimed he could not say anything outside of what his company had disclosed in SEC filings while he was considered his corporate options. That excuse is gone now. Dell's executive team is free -- and should be expected -- to answer any lingering questions and to explain the pros and cons of once again embracing Wall Street scrutiny.
PowerEdge for the edge, plus the core and cloud
A central part of Dell's strategy in storage is to sell more servers. Specifically, 14th Generation PowerEdge models. Those signature Dell servers recently got an injection of processing power and NVMe flash last year.
Since the merger, virtually all EMC storage hardware has gradually phased out other servers in favor of Dell PowerEdge. One exception is Dell EMC VxBlock converged systems, which are engineered with Cisco servers and networking.
Dell EMC paired 14G PowerEdge compute with its flagship all-flash PowerMax SAN arrays, Isilon NAS and Unity family, and as targets for Dell EMC ScaleIO software-defined storage. The newest member of the product family, PowerEdge MX, lets VMware shops roll out IaaS.
Dell has turned PowerEdge and VMware vSAN software into a prominent position in the hyper-converged market. It vies for supremacy with hyper-converged pioneer Nutanix, which also has an OEM deal to see its hyper-converged software on PowerEdge hardware.
Acquisitions and debt
VMware has proven to be a cash cow for Dell. In the quarter that ended in February, the virtualization giant topped $9 billion in revenue, or one-fourth of Dell's $36 billion total.
Dell EMC has paid down $14.6 billion of merger-related debt. Full control of VMware provides newfound liquidity to service more debt and explore potential acquisitions. If you're wondering about potential acquisition targets, a glance at the investment portfolio of Dell Technologies Capital could suggest the types of companies Dell EMC might pursue. However, Dell has had little appetite for storage acquisitions since taking over EMC.