The long-awaited closure of Dell's $67 billion merger with EMC has arrived, and executives of the combined company, which will be called Dell Technologies, are taking pains to reassure customers and the market that the road ahead is clear. There will be plenty to parse and analyze in the coming months and years, but here's a look at some of the most immediate things customers should know.
The Cloud Questions: Dell Technologies is making its biggest bet on hybrid cloud, but won't leave public cloud off the table, executives said during a conference call. As more enterprise application workloads move to hybrid cloud deployments, Dell Technologies will look to scale up its Virtustream business, which currently has a big focus on SAP workloads.
Meanwhile, Dell Technologies is the main shareholder in Pivotal Software, giving it a leading PaaS to sell into the combined installed base, and will also have VMWare's recently announced services for managing workloads across multiple cloud environments.
Finally, while VMWare has said it remains committed to its vCloud public cloud offering, nothing executives said on the call suggested any member of the Dell Technologies family has major designs on competing with the likes of Amazon Web Services and Microsoft Azure.
There are no plans to merge any part of VMWare's cloud portfolio with Virtustream, and customers can expect VMWare to strike more deals for its Cloud Foundation package like the one announced recently with IBM.
The bottom line is that Dell Technologies has a sprawling array of cloud-related products and multiple paths to market. For customers, the question will be how best to navigate that lengthy shopping list.
Can Huge Be Fast?: As the company noted, Dell Technologies is now the largest privately held technology company in the industry. And while Dell and EMC's relationship goes back years, with some synergies already in place, there's unquestionably a massive task ahead as it looks to integrate all the pieces.
But customers can expect Dell Technologies to be a nimble and innovative company to work with, CEO Michael Dell said on the call. "We always think about how do we go faster even as we get larger, and the single best way to do that is to detach yourself from the 90-day reporting cycles that are common among large companies," he said. Taking Dell private in 2013 "has kicked company into a new gear," he adds.
Dell Technologies' federated structure "gives us scale and R&D innovation but also the flexibility and agility where we can have startup businesses that act very fast and aren't governed by short-term concerns," he added, citing Pivotal and Boomi as two such cases. "A big focus will be remaining nimble and agile."
About that Innovation: As a combined company, Dell Technologies will spend $4.5 billion on research and development each year. That's a significantly lower percentage of revenue than other vendors, as was pointed out on the call. "We're satisfied with that level of spend," CFO Tom Sweet said on the call. "[But] we'll continue to look at that going forward." It was not exactly the type of lukewarm committment existing and potential customers want to hear, but time will tell.
No Sunsets Just Yet: Customers can rest easy for now that their investments are safe, as Dell Technologies has no immediate plans to retire overlapping products. "Right now we're reassuring customers that we'll support all product families moving forward," Sweet said. However, "over time we'll figure out what makes sense to put together," he acknowledged. "Support" also doesn't equate innovation, so despite the company's pledge, smart customers will start planning for the future now.
The Product Winners, Losers and Also-Rans: For those handicapping Dell Technologies' competitive fortunes going forward, it's wise to be bullish on VMWare's mobile device management and end-user computing products, Cloud Foundry and Virtustream for SAP application workloads, says Constellation Research VP and principal analyst Holger Mueller.
The future is less clear for Virtustream running workloads apart from SAP, VWMare's hybrid cloud offerings, and Dell Technologies' software-defined data center and PC businesses, he adds.
As for EMC's traditional hardware offerings, Dell servers, security software and other assets, the outlook is bearish, Mueller says.
EMC customers may have the most to be concerned about, says Constellation Research founder R "Ray" Wang.
"Constellation is worried for EMC customers because Michael's strategy appears to be about paying his debtors through asset sales without a clear point of view on the future of Dell," Wang says, referring to deals such as the sale of Dell's software division to private equity earlier this year. "This challenge makes it very hard for customers to feel confident that the EMC assets will be in stable hands."
Some of that clearer direction could be furnished next month at the Dell EMC World conference.
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