JG: Can you share some other thoughts on the acceleration angle of that?
One that we’ve already talked about is clearly the VxRail product line. [Ed. Note: VxRail is hyperconverged infrastructure from EMC’s VCE division.] They have a tremendous channel and opportunity so there’s clear excitement around that case. In the broader sense, we’re building out opportunities where their strength in the marketplace in different segments will increasingly take advantage of the VMware technologies. Some of that will be geographic. They are substantially stronger in China than we are. They will help us get to Tier 3, Tier 4 cities more rapidly. Others will be vertical segments. They’re very strong in the state, local and education marketplaces. They have a very large PC business, as you know. One of the use cases for AirWatch is [enterprise mobility management of] Windows 10 upgrades and environments, a much more cost-effective, efficient way to manage Windows 10 devices, a great opportunity for us with the mammoth Dell channels and PC customers they have. Those are a few examples but every one of these has specific business case, sales motion, etc., that we’re developing with them so we’re quite excited about it.
JG: At this point, you would say a customer shouldn’t expect any changes in how they work with VMware or how they buy from VMware?
Correct. We will continue to support them, work with them as we have in the past. Some may choose to opt into a greater partnership with Dell, EMC and VMware. I’ve had customers that are big Dell customers that have said: Wow, I can start getting more of the VMware technologies pre-integrated with Dell solutions. That’s pretty good. I like that.
JG: I just really want to emphasize this one because openness has been such a big part of your success. You’re assuring customers that that openness and working across the industry is not going to change and that this deal does not unduly favor Dell/EMC.
Absolutely. That’s part of the reason for Michael to be on stage is to say that first-hand. I can say it, but Michael saying it carries a different weight. Also we have, for instance, our Partner Exchange Conference. The day before VMworld, he’s going to stand up in front of thousands of our partners and say the same thing. Some of those are shared partners but those [companies] he competes with are sitting in that audience and will have private working sessions for him to address them directly as well. We’re addressing that head-on with all of those who would be potentially most implicated by that.
BB: What has been the impact of the Dell/EMC deal on VMware in the past year? Has it changed customer perceptions of you? Has it affected company morale at all?
In October, when the deal was announced, everybody was surprised, shocked. I mean it was a big, big deal and those questions were internal as well as with customers and partners; the biggest deal in IT history. As I described it, everybody had the deer in the headlights response: What? Remember, October whatever it was announced, I’ll say there were 30 to 45 days of questions. What does this mean? By the time people heard it for the fourth or fifth time, OK, it’s exactly the same. They get it. And by Thanksgiving, everybody settled down and got back to work.
As we’ve seen over that period of time we had a very solid Q4, we had great performance in Q1 and Q2. The stocks recovered from that original shock. So what was, I’ll say, shock and concern has emerged into optimism and confidence for this independence, the support for the ecosystem, the acceleration of our business. We’re now into a period where people are saying let’s get the deal done because we’re ready to get on with this new phase of the industry. Also, it isn’t just that it builds optimism but also it builds confidence.
For VMware now, our future is assured. There are many people that are going to be merged, changed and [deal with] private equities and all this other stuff in a period of dramatic disruption. We are confident about the position, the stature, the role, the growth, the balance sheet, the structure of the company for the long term. We also turn inward to the employees to say we have the confidence that our product agenda, this disruptive, innovated culture that we have is entirely reaffirmed in this new structure. The culture of the company and the values that we have in the company are not changing in this. In fact, we’re doubling down and driving that aspect of who we are and what we are broadly. The deal is not closed yet, it’s in sight. As a result, the light is at the end of the tunnel. We’ve worked through a lot of those things and people are ready to really go forward aggressively. People are going to come out of VMworld with a bit more bounce in their step, optimism and confidence for the future.
JG: If I’m a company that has really committed to the VMware strategy and consider you a strategic partner, what’s the one thing that I should be most excited about as a result of that Dell/EMC deal?
I think when you look at that, you’ll say: Wow, my partner, VMware, now has turbochargers put on their back. If I was confident in them before, their ability to innovate, scale, deliver globally, support me, commit my next architecture and platform to them, if I was already making that decision on their products, I can now do it with more confidence and expectation that they’re going to be able to deliver more for me in the future.
For every CIO, this is a very unnerving period in their career. They’re owning less, they’re controlling less of the infrastructure and security demands are becoming greater. They have both the opportunity and the essential role to be the source of transforming the business in this digital business environment as never before and they have to make hard choices with regard to both their technology and partners to accomplish that bigger mission and agenda that they have. Being able to look at a key technology partner like VMware with more confidence, that’s a big deal.