This content is part of the Essential Guide: Chronicling the Dell-EMC merger news

Dell-VMware deal begins with risky hands-off strategy

More than a week after its $67 billion acquisition of EMC and VMware, Dell fails to offer specifics on VMware's role in the combined company. Can this be a good thing?

The synergy between EMC and Dell's respective core hardware offerings -- low-cost servers and PCs from Dell, and a wide range of storage hardware and management software from EMC -- is obvious.

What is not so obvious, at least so far, is the strategic role VMware will play in contributing to the newly formed hardware juggernaut. Top executives from Dell and VMware have been all too quick to say VMware products and organizational structure will remain untouched for the foreseeable future.

Michael Dell made it clear in a recent blog post VMware will remain "an independent public company," emphasizing the importance of maintaining the company's successful business model and that no "limitations on [VMware's] ability to partner with any other company" would be imposed.

VMware's CEO, Pat Gelsinger, issued a similar statement, affirming "VMware's mission and strategy remain unchanged." VMware's leadership team "will remain in place" and the company will be as committed as ever to its existing software defined computing, cloud and mobile offerings.

Even at a press conference held on the eve of Dell's annual conference in Austin, Texas this week, when asked what the company has in store for VMware, Dell and several other top company officers failed to spell out any specific strategies involving VMware technologies that could best exploit Dell and EMC's hardware offerings.

Is Dell's hands-off approach to VMware a good plan?

Given the expectations some analysts and users had about the impact VMware's commanding presence in the virtualization market would have on the deal, the "hands-off" statements have perplexed some.

"Gelsinger saying it will be business as usual, that makes sense for now," said Geoff Woollacott, principal analyst and practice manager at Technology Business Research Inc. in Hampton, N.H. "It means [VMware's] management team will be answering to a broader number of shareholders, not to one shareholder with 81% of the stock. Without a dominant owner telling them what to do, it should give them more freedom to pursue their own course."

Some believe a hands-off approach to VMware poses risks for Dell. Not only are Dell and EMC under pressure from tough competitors in the Intel-based servers and storage markets -- both of which are generally declining -- but VMware is also under the same competitive pressures from new and old technologies. Some believe there is growing pressure on VMware to carry Dell-EMC forward, and so they are still waiting to hear from Dell what it thinks VMware's contribution will be.

"It's risky asking VMware to carry such a heavy burden the next few years," said Dana Gardner, principal analyst with Interarbor Solutions LLC., a market research firm in Gilford, N.H. "VMware itself is facing serious headwinds from containers and open source alternatives to ESX via KVM. It would be nice to know how they will work out things, like hyper-converged infrastructure products like EVO:RAIL."

VMware's impact on Dell

While Dell partners and customers are still soaking in the news of Dell's record acquisition, some Dell World attendees believe the company's  ownership of VMware may not have been the main focus of the deal, yet could impact some of its existing partnerships.

EMC has a lot of intellectual property that Dell can take advantage of, including AirWatch by VMware, said Chris Wells, senior consultant at UltraLevel Inc., an IT consultancy firm based in Southfield, Mich.

"AirWatch is one of the top EMM vendors, and EMM is a weakness in Dell's platform," he said. "I think it should definitely get more focus after the Dell acquisition. Dell will provide more focus from users to AirWatch."

I wouldn't be surprised if there were some changes, and Dell dropped some products or maybe even merged some.
David van der Geerdirector of global technical support and training, Zensar Technologies

Dell has its own EMM offering, Dell Enterprise Mobility Management, but now has ownership stake of VMware, owner of the largest EMM vendor by revenue. It may not make sense for the company to continue to push its own EMM product that hasn't been as successful when it could be reselling the top company in the space.

In addition to EMM, VMware has a large presence in virtualization, which could be to Dell's benefit.

"VMware is going to play a big role in the deal," said David van der Geer, director of global technical support and training at Zensar Technologies, an IT services provider based in India with locations across the country. "Dell wanted to buy EMC not only for the storage business, but also for all the extra legs it has to it."

It is likely that Dell's sales teams will bring more attention to VMware's products, bolstering Dell's offerings and VMware's business. How this impacts Dell's partnerships with some of VMware's biggest competitors, including Microsoft, and how it impacts some of its own competing product lines, remains to be seen.

"I think they're going to look at their partnerships, what they acquired, look at their own products and keep the best of breed," van der Geer said. "I wouldn't be surprised if there were some changes, and Dell dropped some products or maybe even merged some … but I think it will take Dell a little bit of time before they make their adjustments."  

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