With Dell striking a new deal to acquire EMC for a staggering $67 billion, it's hard to see what Dell, EMC, and VMware will get from such an arrangement. Is it a meeting of multiple like minds or a huddling of the dinosaurs? Here are four of the major takeaways from this news, as it affects the three companies.
1. VMware isn't going anywhere -- for now
Despite Dell taking what amounts to a majority stake in VMware via tracking stock, the latter is still operating as a publicly traded company with its own board and (existing) CEO. Any changes in VMware's day-to-day operations won't likely show up for months.
When and if this happens, it'll likely be due to Dell pushing its hardware as part of a converged solution using VMware. Dell, VMware, and EMC already have experience in converged infrastructures, so for them to work together is more a matter of scale than logistics.
The bigger question; Will any of that matter?
2. For Dell and EMC, this is a holding action
Though strategically beneficial, this union isn't innovative. It's yet another instance of Dell and EMC (and VMware) struggling to distinguish themselves in the face of competition.
Dell's battles have been prominent. When the company's profits and revenues tanked with the contraction in the PC market, it responded by trying to reposition itself as a services-and-software company a la the post-PC IBM, but apparently got more of a lifeline out of going private. Its once-thriving server business has been hammered by the growth of commodity cloud offerings and the rise of cheap hardware from the likes of Lenovo. Its recent server-level products have been collaborations with folks like Cloudera and Microsoft -- the latter, ironically enough, allowing better hybrid integration with Azure. Dell has been looking for a trend, any trend, from which to snag some wind.
EMC has faced its own problems. The federated organization between itself, VMware, RSA, and Pivotal has drawn fire from investors and pundits, pressuring EMC to divest from them and focus on itself. And despite earning good money thanks to the federation, EMC missed its revenue target earlier this year and kicked off a restructuring spurred by word of weaker sales through 2015. The acquisition by Dell will quiet immediate criticisms about the federation, but it won't change how EMC is, despite its protestations, at risk of getting left behind by the economics of the public cloud.
3. VMware won't be a public cloud escape hatch
If Dell and EMC are looking to VMware to provide a public cloud they can ride back to relevance, they're looking in the wrong direction.
VMware's public cloud isn't of the same constitution as Amazon, Google, or even Microsoft Azure. It comes more from the Dell and EMC side of the business than the Google and Amazon side -- not only in terms of its technology, but its business approach. Its offerings still come from the older paradigm of virtualizing servers and desktops with proprietary software, rather than the newer models that involve lightweight containerization and open source software.
VMware has always wanted to be one of the big cloud vendors, but it had to settle for providing proprietary cloud infrastructure that remains rooted in the old world of PCs and servers. While it's ginned up attempts to pivot in new directions (such as OpenStack integration), they've been reactive gestures, not innovative ones.
4. Dell, EMC, and VMware are endangered species
If there's one common characteristic among all of these companies, it's that they're members of a previous generation being forced to evolve.
Worse, the main option open to them moving forward -- becoming a unified provider of solutions that encompass public and hybrid cloud -- means going toe-to-toe with outfits that already have an established presence. That might explain Michael Dell's emphasis on expanding the company's sales and marketing teams to wave its newly converged product lines under the noses of those sniffing at existing public or hybrid cloud solutions.
Most striking about the deal, it hearkens back to the tech mergers of the previous decade, like HP and Compaq. Those produced little, if any, actual new business models or technology, only a consolidation of existing customer bases. It's possible the sheer size of the new Dell can continue on its own momentum, in the same way Oracle is sustained both by its legacy contracts and the force of its marketing team. But there are no new ideas to be found here.
The union of legacy tech outfits has historically resulted in combinations of mass and weight, and it rarely produces agility or fresh thinking. This merger shows all the signs of history repeating itself.