This week it was reported that one option for @Dell Technologies to reemerge as a public company would be for @VMware to buy Dell Technologies in a “ #reversemerger .” A reverse merger makes sense, given that @Dell EMC is behind in developing compelling #privatecloud and #multicloud solutions, and VMware is not. VMware has been positioned as strongly independent of Dell EMC. CEO @PatGelsinger said last year “We were an independent company, and we remain an independent company.” Such a reverse merger would throw that independence away. The effect could be profound on Dell Technologies’ enterprise private cloud hardware competitors ( @Cisco, @HPE, @Huawei, @IBM, @Lenovo and @Oracle) and VMware’s private cloud software competitors (primarily @Cloud Foundry, @Microsoft #Azure Stack and @Red Hat @OpenStack). Container vendors and the Cloud Native Computing Foundation (CNCF), plus Microsoft’s Azure Stack, could be the biggest winners. Products that can manage private cloud to multi-cloud application deployment will also benefit, such as Hewlett Packard Enterprise (HPE) OneSphere and IBM’s Cloud Private products. Containers vs. Virtual Machines Most enterprise IT shops still use VMs to manage deploying legacy application instances. There will be a shift from VMs to containers and private cloud, but it will be a long, slow shift. Because of the massive installed base of enterprise legacy applications, all major enterprise IT vendors must support VMware for their customer base. However, VMware’s relationships run much deeper than simply support: Recommended by Forbes The Whole Story On Microsoft Tapping ARM To Break Intel's Datacenter Monop... 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Amazon Web Services (AWS) offers VMware Cloud Google partnered with Pivotal to provision VMware NSX HPE has a strategic alliance with VMware IBM has a strategic partnership with VMware, with Dell EMC reselling IBM Cloud for VMware solutions Lenovo sells VMware reference architectures Microsoft Azure offers bare metal instances running VMware One of the effects of Dell’s merger with EMC (resulting in the company’s majority stake in VMware) was that Dell EMC’s IT competitors’ started searching in earnest for long-term alternatives to VMware. Most of them are partnered with or investing in private cloud framework options: TIRIAS Research During 2017, all the top-tier public clouds joined or increased membership levels in the CNCF to declare their support for Kubernetes container infrastructure or simply keep an eye on its progress (“keep your friends close, and your enemies closer…”), including: Alibaba Cloud, AWS, Baidu, Google Cloud, Microsoft Azure, Tencent and VMware. As you can see, many IT vendors have placed redundant investments in private cloud infrastructure. That can’t hold forever. Multi-Cloud VMware Cloud will run apps across vSphere-based clusters, and will integrate, discover and manage VMs and containers on AWS and Microsoft Azure (currently in the US, only). VMware Horizon Cloud Service hosts virtual desktops and applications on VMware Horizon Cloud and on Microsoft Azure. A reverse merger with VMware should be designed to settle Dell EMC’s private cloud and multi-cloud investment strategies on VMware products—otherwise, why bother? Dell EMC is already leaning heavily on VMware. And the rest of the competitive field is already looking for alternatives. Many vendors offer products to scale single-vendor products to multiple datacenters, for example Huawei’s ManageOne and Oracle Private Cloud Appliance scaling to Oracle Cloud for VM deployment (IaaS). But neither of these provides a scalable multi-cloud strategy. HPE OneSphere provides a Software-as-a-Service (SaaS) layer on top of Kubernetes containers, plus VMware and OpenStack VMs (and in the future Microsoft Azure Stack). HPE OneSphere enables managing applications across private clouds and in the future, multiple public clouds (for the moment only AWS is supported, though Microsoft Azure and Google Cloud Platform are under consideration). IBM Cloud Private is built on Kubernetes and Cloud Foundry; it provides a branded “Cloud Native” option for deployment. IBM Cloud Private’s open source application environments are consistent with IBM’s public cloud offerings, enabling a clean single-vendor hybrid application deployment model. In addition, IBM Cloud Private also includes multi-cloud management tools in its hybrid cloud management services and can be managed through its SaaS-based IBM Cloud Orchestrator. IBM Cloud Private can be deployed on VMware and OpenStack distributions. IBM Cloud Orchestrator provides multi-cloud support for AWS, IBM Cloud and Microsoft Azure. Note that, like VMware vSphere, HPE OneSphere and IBM Cloud Private can run on pretty much any industry standard (i.e. x86) hardware—they all support heterogeneous hardware. A Post-Independent VMware World In 2017 VMware removed vSphere support for third-party virtual switches, which had a profound effect on Cisco’s enterprise software-defined networking (SDN) products, as well as HPE and IBM virtual switch products. If a Dell Technologies reverse merger with VMware occurs, I think that will be a driving factor for the rest of the industry to accelerate private cloud investments away from VMware. But a fragmented set of private cloud investments and choices will not pose a competitive challenge to VMware. The rest of the industry should pick a direction, much as they did with OpenStack about 5 years ago. The two private cloud infrastructure strategic directions that make the most sense to me are CNCF for containers and Microsoft Azure Stack for both VMs and containers. As much as OpenStack was a truly great idea in 2010, containers became an even better idea with Kubernetes orchestration in 2015. That is why there is so much overlap in IT vendor sponsorship of both OpenStack and CNCF (notably missing from CNCF are the telecommunications carriers, but that is a story for another time). The cloud giants don’t want to enable each other, but public cloud customers want to have choice among public clouds. HPE, IBM and VMware are trying to fill the gap and have the most advanced multi-cloud applications management solutions today. Dell EMC is leaning on Red Hat OpenStack and Microsoft Azure Stack for undifferentiated private cloud software solutions. Dell EMC also does not have a competitive multi-cloud product. A reverse merger with VMware makes sense from that perspective. Dell EMC needs to harness VMware as a competitive advantage to stay in the game.
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