By now you’ve likely heard the news. It is after all the biggest technology acquisition in history: Dell plans to purchase VMware parent company EMC for a whopping $67 billion. While many other industry giants are downsizing and focusing themselves, this will create a behemoth.
What does it mean for service providers who might purchase equipment from Dell or EMC, plus virtualization from VMware? Ultimately it comes down to a balance between competition (vendor neutrality) and the additional resources and integration offered by a one-stop vendor.
EMC and Dell cover a vast swath of enterprise- to consumer-level computing equipment, from servers and laptops to storage and software.
Under EMC we have VMAX storage, VNX storage, XtremIO flash arrays, Pivotal big data platform and hardware, VMware virtualization (which we’re watching with extra interest), Virtustream cloud, RSA security, and VCE converged infrastructure.
Dell offers a variety of storage brands of its own, including Compellent, in both flash and disk flavors, Statistica big data platform, Enstratius cloud management software, SonicWall security, networking hardware, and converged solutions with two other partners (VMware and Nutanix).
That’s a whole lot of brands that could be merged, spun-off, or eliminated. Or maybe they’ll just keep on trucking. Except, of course, the already announced spinoff of Virtustream. VMware, itself a public company, announced this week that it will form a jointly-owned company with EMC, with the new Virtustream’s financials falling under VMware’s. This entity will be an enterprise hybrid cloud provider.
A bit confusing, to be sure, so the industry will have an eye on the remaining brands should such a convoluted business fate befall them, too.
There are many different directions this could take the end users of the above products. For data center service providers, cloud providers running VMware, and managed service partners, the EMC buyout combines many of the most commonly found brands under a single umbrella. For the immediate future, not much will change. But there is bound to be some adjustment to the existing product suites and partner offerings.
It could end up beneficial, as package deals or “all-in-one” converged IT solutions become easier and less expensive to purchase, without having to juggle as many license issues. For example, a data center provider could buy a complete rack from Dell, with top of the line EMC storage, network equipment, plus an included VMware license. Basically you could get a ready to run cloud hardware platform, just add your own power and cooling. It would come under a single contract with support from the vendor on both the hardware and software side. Sounds easy!
Things could swing the other way, too. With less competition in the market, there is less drive for innovation. While Dell and EMC have partnered and sold each others’ products in the past, particularly storage, they have also competed head to head on many product categories, leading to new technologies and better pricing.
That’s the great fear of vendor lock-in we often face with cloud and virtualization platforms as well. Once your infrastructure is built around a particular solution, the provider knows it is too expensive and time consuming to switch, so they can raise prices, remove features, not worry about responsive support, and generally just provide a less compelling service, because they know you don’t have anywhere else to turn.
Dell and VMware each have cloud offerings already as well, and with the new Virtustream in the mix, Dell/EMC would be putting up some serious competition to partners who are selling enterprise cloud solutions powered by VMware. Not the best way to engender goodwill among your customers.
VMware, Cisco, and EMC also have a converged infrastructure company called VCE that offers preconfigured compute, network, and storage packages. Despite being an outside company manufacturing its own equipment, Cisco will supposedly remain a partner in the Dell deal, but don’t be surprised if this partnership fizzles out as Dell and EMC start to muscle in.
Security product partners may see one of their providers spun-off as well, as RSA and Dell’s SonicWall share quite a bit of overlap.
One thing is for sure: within a year of the deal closing, assuming it does, partners can definitely expect to get some news about licensing, different products, rebrands, and mandatory changes to their current systems. There are bound to be some shake-ups for partners, resellers, and channel providers as these different brands, companies, and products are reconciled.