With Dell acquiring EMC for a record $67 billion, it raises the question: What does this all mean for VMware and its customers? Officially, Dell says VMware will remain an independent publicly traded company. The wrinkle is that EMC owns 83% of VMware’s stock; and Dell is acquiring EMC.
Forrester analyst Glenn O’Donnell says he expects the impact of the merger on VMware customers to be minimal. “You can basically look at this as some musical chairs at the high end,” he says. But other analysts say there could be significant opportunities for Dell to combine its hardware with VMware’s software.
In a conference call discussing the deal, VMware CEO Pat Gelsinger made it sound like business as usual. He spoke of the “substantial leverage” the merger will create for all the companies involved.
But there was a larger point in making that statement: Gelsinger said VMware is still committed to working with other vendors; VMware will not be turning into just a Dell reseller.
Chairman and CEO Michael Dell seemed to support that idea. “Our industry has a long history of companies collaborating and also competing against each other. Certainly that will continue here.”
Simon Robinson, an analyst at the 451 Research Group says there is no doubt Dell will explore ways to cross-sell VMware and Dell products, but he says it would be wise to let VMware remain independent. “The first question many VMware customers will ask is whether this will mean they are somehow locked in to Dell,” Robinson says. “Keeping VMware at arms length was the best thing EMC did, and Dell should do the same.”
There could be tantalizing opportunities for Dell to see its hardware in major growth markets where VMware operates. These include cloud computing, converged infrastructure and software defined networking.
Over the past two years VMware has developed software called EVO to manage converged infrastructure environments – these are systems that offer a combined management platform for compute, network and storage in a single hardware appliance. In the past, VMware has allowed any hardware vendor to run the software, so long as certain technical specifications are met. Dell could push for it to be a primary hardware supplier for EVO though.
Wikibon analyst Brian Gracely says the combined EMC/Dell company could pressure customers into exploring alternative hardware options. “In the near-term (e.g. immediate refresh cycles), it doesn’t impact customers,” Gracely says, because the deal isn’t expected to close until mid 2016. “Mid to long-term, (this merger) could impact (VMware customers’) underlying hardware buys.” One interesting angle to watch here is that Dell is a major partner of Nutanix, another converged infrastructure vendor. Dell could be double-dipping in this market if it keeps that relationship going.
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