Dell is continuing its move to a services company, and it has been an uphill struggle led by their SVP Strategy, Dave Johnson – one of the more impressive M&A professionals. Dell has been on a buying spree, though it recently backtracked on the Quest acquisition.
Here’s an idea for Dell – go after IBM and HP in the storage market. NetApp is currently 10% of the storage market, a little ahead of Dell’s 7.5% or so. But Dell is growing in line with market, whereas NetApp is losing market share. EMC is growing nicely, with its Data Domain and Isilon acquisitions, and NetApp’s acquisition of Spinnaker has been slow to deliver results.
NetApp is trading near its 2-year low. Market cap of $11B hides over $3B net cash. Apparently NetApp has been losing ground largely to Dell and EMC. NetApp is going relatively cheap but might be the way for Dell to dominate the storage market. This would allow what Dave Johnson calls ‘synergistic adjacencies’ – Dell could sell Dell services to NetApp customers, and NetApp services to Dell customers: specifically, Dell is not even on the map of storage resource management. Dell-NetApp combined company surge past HP, Hitachi and IBM, and close in on EMC. The product quality, sales-force competence, product features, product reliability, product support and more are very closely aligned.
(Here is some useful analysis on NetApp from Seeking Alpha).
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