It’s 2019, and after a five-year stint as a private company, Dell Technologies has returned to the public markets. It’s a move that could have enormous implications for enterprise data storage. As a former Dell executive, I’ve closely followed the company’s recent journey from private to public, most recently writing in May about the implications of Dell’s then-rumored plans to go public via a reverse merger. Now that Dell has gone through with that plan, the company has both the means and incentive to fill gaps in its product portfolio through acquisition using its public stock as currency. As a result, the newly public Dell could heat up the enterprise storage M&A market, increasing prices and accelerating exits.

Since it went private five years ago, Dell hasn’t exactly been idle when it comes to storage. After all, the company did acquire the largest data storage vendor in the world when it bought EMC in 2016. And by the numbers, Dell is still in a great place in the storage industry. According to IDC, Dell was the leader in Q3 2018, with just over 19 percent of the total storage equipment market.

That’s great news for Dell, but the good times can only last if their technology can stay relevant. This is a hard act to pull off when you’ve been focused on cost reduction and consolidation for five years. Let’s start with the product portfolio: There are still a lot of overlapping offerings such as its EqualLogic products, which compete with the Unity line, and its EMC XtremeIO and Dell SC mid-range arrays. Unsurprisingly, product development and upgrades have lagged across all these lines as a result of the organizational turmoil inherent in acquisitions of this size and complexity.

But the biggest challenge Dell faces from a storage point of view is that the macro industry trends are moving away from the traditional, hardware-based enterprise storage business model that Dell and EMC have historically dominated. On-premises, CapEx-based storage equipment is giving way to on-demand, OpEx-based services. Gartner predicts that by next year, 90 percent of enterprises will have adopted a hybrid cloud strategy. Additionally, MarketsandMarkets projects the total enterprise cloud storage market will nearly triple from $30.7 billion in 2017 to $88.9 billion by 2022.

In fact, the demand for cloud services is one of the biggest drivers of the recent growth in enterprise storage equipment sales. IDC’s research shows that cloud data centers that sell consumption-based storage services were the fastest growing customer segment for storage hardware purchases in Q3 2018. Sales of storage hardware to cloud providers grew 45 percent to $3.9 billion in Q3 2018, accounting for an impressive 27 percent of all enterprise storage equipment purchases.

One could argue that Dell should position itself to sell storage hardware primarily to cloud providers, but as the cloud continues to consolidate, prices and margins will continue to fall. After all, the largest cloud providers tend to build their own technology and then create their own services on top of commodity components. Selling hardware to cloud providers has always been a low-margin, high-volume business, and that’s not where Dell’s storage business has historically succeeded.

Dell can rely on VMware to help the company compete in cloud computing, but they’ve not done much to ensure their core storage offerings can compete as the world moves to hybrid cloud services. This shift hasn’t fully taken hold yet and probably won’t for a while, but by the time it does, Dell will need to be able to provide customers with on-demand, OpEx-based solutions. Unity will not carry Dell’s enterprise storage business for the next five years.

The easy thing for the company to do is simply amp up the sales machine and try to compete on price. Of course, this strategy only works if the market hasn’t moved on to the next technology wave. Since it is well understood that slashing prices is unsustainable (and a bad thing for a public company to do), a strategy not too dissimilar to HPE’s is probably much more likely to succeed: HPE has done a nice job modernizing its product portfolio with the acquisitions of Nimble, Simplivity, and Plexxi over the last year or so.

What is clear is that, now that it is public again, Dell will need to use its publicly-traded shares to buy startups and growth companies in order to fill product gaps. Certainly, it won’t be as easy as it was recently to make the big dollar buys given the competition, but there aren’t a lot of alternatives. Should Dell rev up its M&A engine as I expect, it will invigorate the M&A market for younger data management companies and also revive VC investment in new infrastructure companies.

Dell faces a lot of challenges when it comes to enterprise storage. But with its return to the public markets it can now use publicly traded shares as currency to provide exactly what both the company and the whole ecosystem need to ensure a brighter future.

Laz Vekiarides is the cofounder and CTO at ClearSky Data. For over 20 years, he has served in key technical and leadership roles to bring new technologies to market. Prior to starting ClearSky, he served as Executive Director of Software Engineering for Dell’s EqualLogic Storage Engineering Group.