Return to Page 1

So, get out — but how? Become a fast-food franchise?

That's a challenge for everybody in that space. There are only going to be a few providers. I think in the server sector, you're down to already three: Dell, Hewlett Packard, and Cisco. In the storage space, it's basically Dell again, which bought EMC; Hewlett Packard; and maybe NetApp — but there's no room for anybody else. And they're all facing declining markets and slower growth or negative growth. It's just a very tough business.

Even on top of that, the hyperscale guys — Salesforce, Workday, ServiceNow, the SaaS providers. You add that to the lost infrastructure column, and all of a sudden, what you used to have in the data center is pretty small.

Do you think that's driving some of the big mergers, like Dell-EMC?

I think that's a major piece of it. I mean, there are trigger events too. Michael Dell's trying to reposition for the enterprise, and Joe Tucci [EMC's former CEO] was going to retire. But yeah, fundamentally, that one made sense, because the industry's got to consolidate to gain efficiencies.

So is Dell-EMC going to work?

The integration of those two firms is going to be a challenge. I have a world of respect for Michael Dell — if anybody can do it, he can — but I think the challenges are severe.

As a commodity provider, Dell didn't really have that many connections to CIOs. Most of their strengths are in purchasing. EMC's at the other end of the spectrum. The go-to-market model is going to be tough to integrate. Like I said, if anybody could pull it off, I think Michael Dell could.

What happens next with the big infrastructure players, like HPE?

I got pretty close to understanding HPE’s strategy when I was lead director on Aruba. I had the opportunity to sit down with Meg [Whitman, HPE's CEO] and understand her strategy. I think it's pretty clear.

They're going to focus on being a hardware provider. She thinks that's the only option the company has that's viable. So, they're going to go compete head-on with Dell and Cisco, and they're working on strategies that will allow them to, if you will, disrupt Cisco's margins, in particular, and try to force Cisco to stop subsidizing the server business with the profits they have from the network business. I think it's fundamentally a sound strategy.

Cisco's the one I don't understand right now. The leadership change over the past year, I think, hasn't quite settled down.

So you look at the three big players. Dell has their hands full with EMC and making that work. I think HPE’s got some restructuring still to do, to get to the product line they want to have to go toe-to-toe with Cisco. And I think Cisco right now is trying to sort out what they want to be in three to five years.

I'll be curious about Cisco. It really is already a different company.

I don't think they've really figured out where they're going to land. You're right, it's already a different company. I'm not sure I understand the full scope of the changes.