EMC Buying Documentum - Consolidation Fighting For Relevance
from the consolidation-everywhere dept
EMC, a company that has gone through some troubles, has been on a pretty massive buying spree lately. Not long after spending $1.3 billion on Legato, they're now planning to dump another $1.7 billion into buying Documentum. The article linked here does a pretty good job explaining why this deal makes sense for EMC, adding a content management solution on top of their hardware storage platform. Not the most exciting story for most folks who might never go near this stuff, but it does highlight some interesting consolidation trends. During the boom years, everyone was so focused on "best of breed" vertical tech companies that focused on one area in particular. Everyone trashed companies that tried to provide complete integrated offerings. Things have changed. Now, with so many companies struggling, we're seeing more attempts at consolidating (somewhat) complementary products to bundle them together and offer a complete "solution" (a term the marketing folks love). Of course, everyone is now ignoring the story from five years ago when it was only the best of breed players who could adapt fast enough to keep up with the market. The response, though, is that most of the best of breed options created a huge integration mess, and then never worked as well as advertised anyway (if at all). So, now, the question is whether or not you can take a bunch of those best of breed players and tie them together. It must be tempting to do so when valuations are low, but the same integration questions remain - along with figuring out what to do with thousands of new employees. On top of this, these older companies are increasingly finding themselves competing with more disruptive products coming from below. They're combining a bunch of expensive products, hoping that the price, when added together creates a 2+2=4 (or even 5) result, when new entrants are increasingly figuring out how to provide a simpler solution that costs less than any individual piece of the older players.
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Turned out that the two together were weaker than separate parts.
Same thing could happen here as well. Turn key solutions are great, particularly for products/projects as complex as massive data storage and document flow / retention ... HOWEVER ... you always have to find out how much of a premium people are willing to pay for the key. Many folks would rather buy and assemble the parts (often a big cash savings) or integrate existing parts. I've always been fond of 'best of breed' solutions and 2/3 of this may be the best ... the legato part may not compete though.
Just 2 cents.
--RJD--
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