Take Five With Tom Fenton
5 Ways the Dell Purchase of EMC Will Benefit VMware
The changes, to both Dell and VMware, will be massive.
Dell Inc. should finalize the purchase of EMC this summer. Dell (a privately held company) will pay approximately $67 Billion for EMC (a publicly held company), making it one of the largest IT purchases ever undertaken. EMC's crown jewel is its 80 percent stake in VMware. Here are five takeaways about how Dell's purchase will affect VMware for the better.
Long Term Investment vs. Quarter-Driven Profits. One of the biggest impacts is that Dell, as a privately held company, can make investments for the long-term. It's clear that the IT companies that will survive need to think long-term.
Cloud Services. Amazon Cloud Services (AWS) generated $2.6 billion in revenue during the first quarter of 2016; it continues to grow fast, and is Amazon's most profitable business. This clearly shows how important cloud services are going forward. With the acquisition, Dell has the complete stack: its servers, EMC's storage and VMware's software. This, coupled with the ability to make the long-term investments in this space, could significantly enhance VMware's chances of competing with the big boys.
Simplification of the hardware and software stacks. Although the cloud will be a huge part of the future of IT, some companies will still want or need to run applications locally. That fact, combined with the general direction of IT toward simplification, means it's easy to foresee a tighter integration between Dell, EMC and VMware to simplify application delivery.
Sales This is a strength of both the old and new VMware owners. Dell has perfected the art of selling to the small to midsize business (SMB) market, while EMC has a built up a good relationship with its enterprise customers. VMware should be able to leverage both of these to increase the penetration for its non-hypervisor-related products; consider, for example, deeper Virtual SAN (VSAN) adoption in the SMB space and VMware vRealize Ops for the enterprise.
Services and Professional Services The sales force can make the initial sale, but it's the services organizations that keeps the customers coming back by making sure they're happy. All three of these companies have solid support organizations, with some having pockets of excellence. For example, the EMC Isilon (scalable network-attached storage) recovery team has an excellent reputation in the industry. If the companies can replicate best practices throughout the organizations, everyone will win.
Tom Fenton has a wealth of hands-on IT experience gained over the past 25 years in a variety of technologies, with the past 15 years focusing on virtualization and storage. He previously worked at VMware as a Senior Course Developer, Solutions Engineer, and in the Competitive Marketing group. He has also worked as a Senior Validation Engineer with The Taneja Group, where he headed the Validation Service Lab and was instrumental in starting up its vSphere Virtual Volumes practice. He's on Twitter @vDoppler.