2015 was filled with many big technology acquisitions, the most notable of which was Dell dropping a whopping $67 billon for EMC. One of the most interesting questions that has been raised regarding the acquisition is what happens to the EMC Federation companies, most notably, VCE (disclosure: VMware is a client of ZK Research).
VCE was founded as a joint venture between three market-leading vendors – VMware, Cisco, and EMC – to deliver a converged solution comprised of products from the three companies. In October of 2014, VCE announced it was acquiring controlling interest in the JV from Cisco (VMware was a minority shareholder).
The value proposition of VCE is to take the complexity out of deploying a private cloud using VMware, Cisco, and EMC technology. There are hundreds of thousands of settings to configure when bringing these vendors together, making it a daunting task for customers to do so on their own. VCE's "magic" is in delivering a pre-configured, validated, complete converged infrastructure product that allows customers to stand up a private cloud in as little as weeks. For most organizations, VCE is the only way to get this done.
The flagship product from VCE, Vblock, obviously uses VMware for virtualization, Cisco for networking and compute, and EMC for storage. The acquisition by Dell has raised some speculation from customers that the new parent company would ditch Cisco networking in favor of Dell switching. I understand the logic behind the speculation, as Dell has a robust data center networking portfolio from its 2011 acquisition of Force10.
I want to be clear that most of the companies I have interviewed are positive on the merger, but there is a group of customers that has some trepidation. If you're in this group, I believe there is nothing to fear, for a number of reasons.
First, every public statement from the management teams at VCE, Cisco, and Dell has reiterated that the company will continue to build and sell Cisco-based Vblocks. Even if you believe that vendor executives are just giving a party line and there is some behind-the-scenes, clandestine plan to deep-six the current Vblock, management would not be as emphatic as they are. More likely, the party line would be something along the lines of "We have no immediate plans," or "We'll evaluate our options post acquisition."
Another reason is that the customer satisfaction around Vblock is extremely high. All three companies are highly customer-focused, and doing anything to disrupt the VCE customers would go against the customer-centric nature of any of the three companies. Cisco is the market leader and de facto standard in networking, meaning a Cisco-based Vblock solution has a much bigger addressable market than one with any other vendor.
Lastly, there is a technology argument to be made as well. Dell Force10 is great technology, but VCE uses not only Cisco Nexus switching, as well as the Unified Computing System (UCS), for which there is no Dell equivalent today. VCE also uses Nexus in its Rack offerings, so the VCE investment in Cisco goes beyond Vblock.
Looking ahead, I do believe Dell could build a version of Vblock that uses Dell networking, similar to the current VxBlock that leverages VMware's NSX network virtualization product. But this would be in addition to the current Vblock product, not a replacement.
Dell's acquisition of EMC has the potential to give more businesses more options, which is something customers should be excited about, not something to fear.