Here’s a funny thing: I used to work for a company that worked with EMC. This company, a small outfit outside of Boston, was in charge of taking factory-defect mainframes, breaking them down, and recycling them. We’d strip out the hard drives, wipe them, and sell them, then rip out the metal armatures from the server cabinets and sell the metal, and scrape processors off the circuit boards to sell the gold and palladium. We used every part of the buffalo. I say this is funny, because over the next few years post Dell-EMC merger, Dell is going to be doing the exact same thing to EMC, only on a much larger scale.
EMC used to be the only game in town, if you wanted to store a large amount of data. They’d sell a half-million-dollar storage rack capable of holding something like a hundred five-hundred gigabyte hard drives: fifty terabytes of data in a machine the size of a walk-in closet, with cooling units each the size of a cat carrier. And if one of those coolers—basically a giant fan in a modular box—broke, that represented about a two thousand dollar replacement part, assuming you bought new. As I recall, we made a great deal of money selling used parts salvaged from broken EMC hardware.
You’d think that, in this era of massively redundant online cloud storage, EMC would continue to make a killing. True, most businesses have uploaded their private clouds into the infinite ocean of Amazon Web Services, Google, and Microsoft Azure. But those selfsame cloud storage companies still need to get their infrastructure from somewhere, right? Sadly, EMC failed to realize that the people who run those companies are full of clever bastards who don’t want to pay two large to fix a broken fan, multiplied across a data center the size Rhode Island.
Back in 2012, or so, a small group of Facebook engineers started what’s known as the Open Compute Project. This foundation was based on the idea of inter-operable hardware. They published a compendium of technical specifications for servers, server racks, switches, and software, and made these specs freely available to everyone. The first upshot of this is that you or I could get some capital together, call some manufacturers in China, and use these specifications to make hardware that could instantly be dropped into Facebook’s server farm with little or no maintenance necessary. Soon it wasn’t just Facebook joining Open Compute, but also Microsoft, Intel, Rackspace, Goldman Sachs—basically anyone who needed an ungodly amount of storage for a less ungodly amount of money. The second upshot is that with this barrier to entry removed, EMC gained two or three dozen new competitors, and the cost of software and infrastructure has now been commoditized.
In the face of this gleeful economic sabotage, EMC has no choice except to change or die—hence the acquisition by Dell, which has got to be the most out-of-the-frying-pan-into-the-fire business deal ever conducted. In my opinion, not even the largest tech merger in history will save these two companies—meaning that my old organization will enjoy a glut of business in the years to come.
[Post image via Shutterstock]