Will Dell go Re­verse Gear?

PCQuest - - SMB CORNER - Ra­jneesh De, Group Ed­i­tor ra­jneeshd@cy­ber­me­dia.co.in

The Wall Street and other fi­nan­cial bourses ru­mour mill is abuzz with the story in which Dell will al­low it­self to be ac­quired by VMware as a short-cut to its own re­turn to pub­lic own­er­ship.

This may be clever fi­nan­cial gym­nas­tics that help the com­pany pay down debt now that it can no longer off­set in­ter­est pay­ments to the same ex­tent pos­si­ble be­fore the USA’s new Trumpian tax regime. But Dell needs to ex­plain what such ma­noeu­vres mean be­fore tongues start wag­ging about why it’s ap­par­ently re­vers­ing course and rob­bing VMware of the plau­si­ble in­de­pen­dence it must have to suc­ceed.

Dell go­ing pub­lic again would be a sub­stan­tial re­ver­sal be­cause the com­pany has rev­elled in not be­ing listed. Michael Dell has of­ten said that his com­pany does its best work for cus­tomers when it doesn’t have to ex­plain it­self to fi­nan­cial mar­kets every 90 days and that be­ing pri­vately-owned is Dell’s se­cret sauce com­pared to ri­vals like HPE that have to find ways to keep in­vestors sat­is­fied.

Dell, the com­pany and the man, have also re­peat­edly said VMware is a won­der­ful as­set be­cause it is do­ing as much as any­one to de­fine the hy­brid cloud and the soft­ware-de­fined data cen­tre. Dell be­lieves that VMware will set agen­das for years to come, and haul in buck­ets of money, even as data cen­tres are scat­tered across mul­ti­ple pub­lic and pri­vate clouds.

That view is based on VMware’s not-wildly-op­ti­mistic be­lief that net­work vir­tu­al­iza­tion is at least as big an op­por­tu­nity as server vir­tu­al­iza­tion, be­cause be­tween cloud and mi­croser­vices we’ll need the abil­ity to cre­ate, au­to­mate and se­cure net­works like never be­fore. VMware’s also demon­strated other ways to make ab­strac­tion and iso­la­tion use­ful, and grow new lines of busi­ness by do­ing so.

Plat­form com­pa­nies must work with part­ners. VMware un­der­stood this early in its his­tory and so did EMC when it ac­quired the server vir­tu­al­iza­tion pi­o­neer. The stor­age in­dus­try, In­tel and server-mak­ers were there­fore happy to be tugged around by a soft­ware com­pany they mostly dwarfed be­cause VMware added value to them all and did not do any no­table favours for EMC.

To­day, VMware’s arms-length re­la­tion­ship with Dell means part­ners and cus­tomers alike still don’t feel like they’re be­ing hugged just a bit too tight by a gi­ant that knows it can be care­less of its strength.

But ru­mours of ac­qui­si­tions or merg­ers mean it is nat­u­ral to ask if Dell and VMware have plans to in­te­grate in some way that could make them more than very close al­lies.

A post-en­thu­si­as­tic-part­ner­ship be­tween Dell/VMware might look a bit like Sun/Oracle – bravely in­sist­ing that mu­tu­ally op­ti­mised hard­ware and soft­ware have ad­van­tages galore while never look­ing in the di­rec­tion of the bone­yard oc­cu­pied by ven­dors who tried and failed such strate­gies (There’s a grave in there re­served for IBM’s mid-range plat­forms, too.)

A more likely out­come is that Dell finds a way to re­alise the value of VMware to help it pay down debt. Just 18 per cent of VMware is pub­licly traded. Plenty of in­vestors might fancy a chance to hitch a ride and the cash they send could pay of Dell’s debt.

Right now, such an ex­tended sale of VMware looks like a more com­fort­able op­tion: the com­pany shed US$10bn of value af­ter the ru­mours of a Dell buy emerged, in­di­cat­ing dis­plea­sure with such a plan among in­vestors.

Plat­form com­pa­nies must work with part­ners. VMware un­der­stood this early in its his­tory

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