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How the Dell/EMC deal will affect VMware

By John Katsaros

October 20, 2015

VMware is facing two mountains it must climb in the next six months.  First, as a result of the EMC acquisition by Dell, VMware will be recapitalized and open with many more shareholders – almost the opposite of what it is now, when only 17% of shares are traded publicly

Second, it must keep its customers loyal by providing high-performance VMs and improved management systems to handle many times more VMs than it presently can.

VMware – Recent Docker Activities

As Focus on Docker has pointed out in the past, VMware has actively engaged with Docker and containers:

  • VMware has announced its plans to integrate with Docker Containers, Kubernetes, Mesosphere and Pivotal Cloud Foundry.
  • Management Tools – VMware recently announced its plans for container integration with vSphere Integrated Containers.
  • Photon OS is a VMware open source technology preview of a minimal Linux container host designed to have a small footprint and boot extremely quickly on VMware platforms. Photon OS™ is intended to invite collaboration around running containerized applications in a virtualized environment.

VMware is being recapitalized to help fund Dell’s buyout of EMC, VMware’s parent; this will be a huge burden on the management team.  It will be difficult to keep focused as their financial structure changes.

Impact on VMware

VMware has a huge customer base which will soon be “container-ready” with or without VMware.  The company must expand its vision of how VMs and containers work together.

VMware should focus on extending VM usage as much as it can by:

  • Increasing the performance of its VMs so that they raise the management and usage by a factor of ten (the same tools and headcount that run tens of VMs to run 100 VMs with similar performance),
  • Moving to cloud and services blueprints for enterprise apps running on high-performance VMs
  • Developing some clever licensing practices to reward customers for high-volume deployments, early containerization of enterprise applications and loyalty.”
  •  Lengthening its licensing agreements and providing estimated usage focus on licensing in a mixed environment.

In a conference call when the deal was announced, VMware CEO Pat Gelsinger spoke of the “substantial leverage” the merger will create for all the companies involved, which Network World interpreted to mean VMware is still committed to working with other vendors and that VMware will not be turning into just a Dell reseller.

Dell CEO Michael Dell seemed to support that idea. “Our industry has a long history of companies collaborating and also competing against each other. Certainly that will continue here.”

Impact on Docker

We recently asked Docker’s SVP of Product Scott Johnston, about changes they will make as a result of the Dell/EMC combination.  The response was basically, “Expect no changes.”  That’s probably the right thing to do.  Docker is ahead in the race, with a big lead, for the next generation of Data Center Operations.  As Satchel Paige said “Don’t look back. Something might be catching up with you.”