Podcast, Interview
a16z Podcast | Dell + EMC -- Why the Python Just Ate the Cow
- Enterprise IT is projected to continue shifting toward digital, information-centric models over the next five to ten years, with large enterprises increasingly building architectures mimicking Google or Amazon environments without owning the underlying infrastructure.
- The largest enterprise cloud environment is forecast to be Azure within the next two years due to Microsoft's capacity to ingest massive application footprints, potentially surpassing AWS and rivaling IBM, which is predicted to become the second-largest enterprise cloud provider.
- Enterprise cloud strategies will remain strictly hybrid to leverage external data sources such as social media, weather, and traffic, while new distributed applications and data analytics will be constructed on greenfield data center architectures resembling public cloud setups.
- Public cloud vendors currently offering free infrastructure are expected to increase pricing for enterprise customers in the future after leveraging initial access to lock them in.
- Dell's private status is expected to provide the financial latitude to manage its balance sheet creatively and pursue long-term strategic bets, contrasting with public tech companies whose options may be constrained by activist shareholders.
- Activist shareholders in large public tech companies are predicted to limit optionality for long-term risks required for M&A and innovation, potentially creating toxicity that negatively impacts R&D investment and strategic deals.
- Customer planning horizons are expected to shorten to the immediate future and six months due to fears of canceled long-term roadmaps following "gun to the head" style acquisitions like the Dell-EMC deal.
- Enterprises will likely increase reliance on APIs, platforms, open standards, and open-source technologies like Git and NoSQL to mitigate vendor risks associated with future acquisitions.
- The primary risks surrounding the Dell-EMC merger involve a muddled sales organization and go-to-market strategy rather than technological incompatibility.
- Sales force integration challenges are anticipated, with Dell representatives potentially struggling to sell high-margin EMC storage products and EMC reps struggling to sell Dell's commodity server components due to misaligned compensation models.
- Cultural integration between the merged entities is identified as a significant variable that could lead to failure, referencing historical lack of success in Symantec and Veritas integrations.
- If Dell fails to integrate EMC, other public companies may avoid similar privatization attempts, whereas a successful integration could drive others to seek similar market latitude.
- There is a possibility that Dell will successfully integrate to sell "highly engineered systems" using commodity components to maintain cost-effectiveness, despite the stated risks.
- Customer vulnerability regarding future product support is a concern following sudden acquisitions, prompting a shift away from reliance on long-term vendor roadmaps.