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The time has come for Dell (DELL) to do a “transformational” acquisition, UBS analyst Maynard Um asserts in a research note this morning. He thinks the company needs to reduce its focus on commoditized hardware and make a move into higher margin services and software.

EMC (EMC) threw a monkey-wrench in the data storage industry yesterday with its surprise $30-a-share cash bid for Data Domain (DDUP), which last month had agreed to be acquired by NetApp (NTAP) for $25 a share in casth and stock. The market today is reassessing the valuation of all of the players involved in the deal - as well as rivals of Data Domain in the data deduplication business. (The general idea of data dedeuplication, by the way, is to provide more efficient back-up data storage which avoids the archiving of multiple copies of the same piece of data.)

Thomas Weisel Partners analyst Doug Reid this afternoon cut his rating on EMC (EMC) to Market Weight from Overweight, trimming his price target to $12 from $13.

Reid says that “based on checks and recent industry trends,” he expects EMC’s share of the external networked storage market peaked at 26% in 2008 and will decline to 24% in 2010.