The Wall Street Journal is reporting that EMC is weighing its options for a merger or the possibility of being acquired. Though seemingly serious conversations about an HP/EMC merger have fallen apart, according to the New York Times, some industry-watchers suspect they could be revived.
EMC is also reportedly talking with Dell which might be interested in buying pieces of the storage giant. Analysts have told Market Watch that Cisco or Oracle may be potential suitors as well.
In August we reported that EMC was being pressured by investor Elliot Management to split itself into parts because entities like VMWare were being dragged down by the performance of its slow-growing business units.
While most of the press thus far has focused on how EMC’s investors and merger/acquisition partners might be affected, we can’t help but ask what happens to EMC’s Information Intelligence Group (IIG), which owns Documentum and Syncplicity, and to AirWatch which VMWare recently acquired.
Would Documentum Be Better Off on Its Own?
Ever since EMC acquired Documentum in late 2003 there’s been a persistent question among market watchers as to whether the two companies belong together. As recently as last April, 451 Research Director Alan Pelz-Sharpe called on EMC to dump Documentum.
In his paper he noted that IIG represents just 3 percent of EMC’s revenues and that the two companies fail to add value to each other:
At 451 Research, we believe it's time for EMC to divorce itself of IIG, a product division that never really fit into EMC as a whole, and has continued to disappoint CEO Joe Tucci. There are two very good companies here, the storage and cloud giant EMC, and the business application wannabe IIG, a.k.a. Documentum. Both groups are trying to do the right thing, but find themselves pulling in different directions."
It’s impossible to predict what would happen to Documentum if EMC merges or becomes acquired, but one thing is certain, it won’t be a motivating factor for EMC’s merger partner or buyer.
That being said, a start in a new place, or as an independent company might be very interesting, spark new creativity and be good for everyone all round. We suspect we wouldn’t see too many tears.
Tempting to Speculate, But …
There are all kinds of predictions we’re tempted to make but without knowing if EMC will actually be making any changes and, if so, with whom, it’s simply too early to do so. But should anything be announced, we’re there. If you hear anything, we’re all ears.
Is Enterprise Sync and Share Valuable to Every Vendor?
There’s little doubt that EMC Syncplicity offers a hot enterprise file sync and share solution (EFSS). Gartner recently gave it the top slot in its Magic Quadrant. And since none of the companies that EMC is being speculated to form a relationship with offers a top tier EFSS solution, Syncplicity would likely remain intact and gain more market opportunity, given that its sales reach and the established customer base of its parent(s) would likely become even larger.
As for AirWatch, there would likely be no effect as VMWare is performing well, and it would behoove a new or acquired EMC to leave things as they are.
It’s Time to Sit and Watch, Closely
The tough thing here is that whatever happens (or doesn’t happen) with EMC, the ECM and EFSS solutions the EMC Federation offers aren’t core (in terms of revenue) to its established business. The EFSS solutions, however, may be keys to their future, from our point of view.
For now, we’re keenly interested to see how this plays out because something is likely to change if EMC investors are as unhappy with their returns as reports suggest.