Storage giant EMC has considered selling itself to HP, according to reports. Although that deal fell through, sources say, a merger with Dell may still be on the table.

For about a year, HP and EMC discussed a "merger of equals" which would have created a colossus worth about US$130 billion, but the deal fell through over financial terms, and over fears that the shareholders would not wear it, according to reports in the Wall Street Journal and CNBC. EMC has also discussed a merger with Dell, according to the sources.

EMC is considered vulnerable, as its long-term CEO Joe Tucci is expected to retire in February, and "activist" investor Elliot Management - which bought a stake in the company in July - has been agitating for it to sell off its highly-profitable enterprise cloud subsidiary, VMware.

According to the reports, HP's Meg Whitman would have been CEO of the giant merged outfit, and Tucci would have been chairman. Among the obvious difficulties in such a deal would be the huge overlap between the firms' products - comparable to the overlap with Compaq, which HP struggled to digest in the late 1990s. HP owns 3Par which compets with EMC's storage products.

Any Dell merger would have to be different, given the company is somewhat smaller then HP. Reports suggest that Dell would have to swallow some of the EMC product line - its storage units could take precedence over Dell's Compellent product, and spin off the rest, probably including VMware and the RSA security business.

All parties to the deal have declined to comment on the story.