By Charles King, Pund-IT, Inc. May 1, 2019
Corporate acquisitions nearly always float on rising tides of optimism. The soon to be merged businesses and their executives believe their lives, futures and potential will be brighter if conjoined than apart and spend significant resources to that end. However, there is still considerable work ahead after a deal is done.
Products, divisions, leadership positions great and small all need to be considered, rejiggered and sometimes replaced. Old faces depart, new hires arrive. At the end of what is often a years-long process, the whole is, hopefully, greater than the sum of the separate parts.
But how often is that true? In the case of large-scale tech industry deals, middling results or outright failure is all too often the case. Just look at HP’s Compaq, EDS and Autonomy acquisitions. But there have been some notable successes, including Dell’s 2016 purchase of EMC for $67B, the largest such deal in tech industry history.
The fully mature results of Dell’s effort were on display in Las Vegas this week at Dell Technologies World 2019. Let’s consider what the company has accomplished, where it is going and what that means for its customers, partners and competitors.
Evolution in motion
Why is the most difficult part of any acquisition after the deal is done? Because the time doesn’t offer the space to get things right. Customers continue to develop. Markets continue to grow. Competitors seek or strive to create an advantage. Oft times, the circumstances that made a deal appear attractive shift radically by the time a deal concludes.
Stuff happens, in other words, and in order to avoid pratfalls and succeed, acquiring vendors need to stay on point, keep their balance and make constant, multitudinous and often delicate adjustments. Call it a high wire balancing act above a tank full of ravening sharks, keeping in mind that a sizable portion of the audience is hoping to see blood in the water.
What changes has Dell weathered since September 2016? Let’s start with the surprising outcome of the U.S. elections that year, and the ascension of a new president who, though remarkably friendly toward corporate interests, appears to harbor animosities toward the tech industry. Add in continual stumbles by some tech stalwarts, especially related to customer privacy and security, and skirting the edges of competitive misbehavior.
Then there are the upward shifts in interest rates from the remarkable historically friendly levels to those that have required many corporations to refinance their debts. Then Dell decided to return to public ownership after successfully going private in 2013. That process was hotly opposed by gadfly investor Carl Icahn, who also tried to hobble Dell’s reemergence as a public company due to disagreements on the valuation of its VMware holdings.
What about broader tech markets? While some sectors, including general purpose servers and storage have significantly faltered, others, like hyperconverged solutions are growing at healthier than average rates. Cloud computing and how mega cloud players are sourcing their IT infrastructures continues to help some vendors and harm others. Finally, long-suffering PC markets are showing signs of revival, buoyed by continuing technical enhancements and value pricing.
Dell, EMC and VMware together
So, what were the underlying themes at Dell Technologies World 2019? The largest on Day One was the result of the ever-deepening relationship between Dell and VMware. For some folks, it may sound like a heaping helping of same old/same old but that ignores some critical points.
From the very start (years before the Dell deal), VMware was a disruptive force that enabled the x86 data center and cloud revolutions. Without virtualization, x86 server cost/efficiency sucks badly, and virtualization is also central to cloud management automation. When VMware was in play in 2003, EMC’s then-CEO Joe Tucci saw a far bigger picture than most others. EMC was also the only non-controversial suitor for VMware, setting the stage for what many consider the greatest acquisition in tech industry history.
By 2015 when Dell and EMC began exploring a future together, things were vastly different. VMware had become the de facto x86 virtualization platform for most enterprises (the company boasts around 600k customers), besting all competitors, including Microsoft’s Hyper-V. That success eliminated controversies that might have made Dell’s pursuit unlikely or impossible.
At one level, Dell is simply one of VMware’s many data center vendor partners, but at another, it’s all about singularity of purpose. When Dell published its annual report in September 2017, it used the tagline “Better Together” to emphasize the “all for one/one for all” value of the combined companies. In 2018, Dell EMC World was rebranded, “Dell Technologies World.” Then last September, Dell was the first vendor to announce full support for and a new Provisioning Service leveraging VMware’s WorkspaceOne service. By maintaining a closely aligned collaboration, the two companies have realized significant mutual benefits.
Better Together V2
So, what’s new and different? This week, Dell and VMware demonstrated the deepening value of Better Together—call it a next phase—by collaborating on new hybrid cloud services and solutions. What kind of offerings?
- Dell Technologies Cloud Platform is an integrated solution designed to span private on-premises clouds, public cloud platforms or any hybrid combination that customers prefer. On-prem implementations will leverage Dell’s VxRail hyperconverged infrastructure solutions optimized for VMware’s high-performance compute, storage and networking software powered by vSphere, vSAN and NSX.
- Cloud Platform systems can be seamlessly integrated with public cloud services offered by the 4,200+ members of VMware’s Cloud Provider Program, with VMware’s Cloud Foundation providing a common interface for on- and off-prem management and maintenance tasks.
- The Dell Technologies Cloud Platform will provide the foundation for a new Dell Cloud Data Center-as-a-service offering designed, deployed and managed by Dell Services.
- In addition, Dell Technologies Cloud Platform provides the foundation for VMware Cloud on Dell EMC, a simple, secure and scalable infrastructure-as-a-service offering that can span customers’ on-premises data center and edge locations.
- VMware Cloud on Dell EMC will be fully managed by VMware, enabling customers to focus on business innovation and differentiation.
This may seem a bit circuitous, but in essence it demonstrates this: By closely collaborating, Dell and VMware have developed a highly integrated, highly scalable, operationally consistent cloud computing platform that can be purchased, deployed and managed as an on-prem system that supports virtually any hybrid cloud design by interacting seamlessly with thousands of public clouds. Plus, that same offering can be implemented as an as-a-service solution acquired through either Dell or VMware.
In other words, through close collaboration, Dell and VMware are ensuring that their customers can get whatever cloud solution or service they need, however they like and from whichever vendor they prefer.
Call it the customer-centric cloud.
Microsoft Azure – Out of the blue
IT vendor conferences aren’t often the places of miracles, but the opening day of Dell Technologies World 2019 came pretty close. That’s when Microsoft CEO Satya Nadella joined Michael Dell and VMware CEO Pat Gelsinger onstage to announce plans to allow Microsoft’s Azure cloud computing customers to use VMware software to manage their IT operations in Azure. Other new VMware management services planned for release later this year include one that works with Microsoft’s Office 365 and Active Directory, and a test solution for Microsoft’s Windows Virtual Desktop. A VMware software defined-data center (SDDC) on Microsoft Azure solution will also be available from Virtustream, Dell’s enterprise class cloud company.
Why call it a miracle? Because such a meeting and agreement would have been essentially unthinkable when Microsoft was led by former CEO Steve Ballmer. Ballmer reportedly offered to buy VMware then, when that effort failed, threw the company’s full weight behind creating a competing hypervisor, Hyper-V. Despite pricing Hyper-V at a fraction of VMware’s vSphere, then including it freely in Windows Server, Microsoft was never able to slow VMware’s momentum, let alone kill it.
But that was then. Under Nadella, Microsoft is a more pragmatic organization, recognizing that serving customers outweighs racking up symbolic competitive points. As a result, the company has embraced partners and pledged support for technologies that its clients consider business critical. That includes adopting and utilizing heterogeneous technologies from a wide variety of vendors and sources.
This new deal mirrors previous agreements that VMware inked with AWS and IBM Cloud but it’s also likely that Dell (a longstanding premiere Microsoft partner) helped shift the balance. In any case, this was another example of good news for customers coming out of Dell Technologies World 2019.
Overall, Dell Technologies World 2019 hit some remarkable high points right out of the blocks. Along with some notable new and updated products, the results of Dell’s deepening collaboration with VMware offer insights into just how transformational the EMC acquisition has been. By dint of that deal, Dell Technologies has expanded or achieved new leadership positions across a range of traditional, developing and emerging technologies and global markets.
That’s been great for the company and its shareholders, but it also contains excellent news for Dell’s clients. In fact, a key point to most of Monday’s announcements was how singularly they focused on enabling new capabilities and business initiatives for clients and addressing their key concerns. You can certainly say that Better Together V2 clearly indicates how well Dell and its various divisions and partners are working together. But the practical results of those customer-centric efforts are better engagements and outcomes for the tens of thousands of businesses and tens of millions of consumers that Dell Technologies serves.
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