So take a look at the video (check out Ray Wang and my first take here, too):
Want to learn more – here is the 1 slide update:
Want to read on here -you go:
When new companies are formed, the question is of course, what is their business model and market going forward, we take a look at 3 scenarios:
Nothing changes (in the private to public cloud ration) – Dell is no doubt well positioned, serving the existing level on premises / private cloud computing, not only providing all gear to build and operate a data center, but also important software that enterprises beyond that (e.g. think of Pivotal products, VMware EUC). Those enterprises that don’t want to run local data centers – there is a good / interesting offering with Virtustream. Dell also has a veritable services business that will not see turmoil, as buying decisions would support the status quo, as such giving time to fine tune services model. The only problem in this scenario: It never happens that nothing changes.
Slow move to public cloud (10 years till we reverse today) – Here we assume a slow move to public cloud, reversing that the 10-20% of enterprises load that is in the public cloud will be the level of private cloud / on premises remaining in 10 years. This scenario is still favorable to Dell, as it allows for Dell to build products and services that will be in demand of that transition. To a certain point the recent VMworld and EMC World events gave a glance into this area, where both vendors pointed out offerings that will make it easier for enterprises to move to the public cloud. The private nature of Dell, being shielded from quarterly earnings pressure, may also allow Dell to build the hardware and software it needs to equip the large public cloud vendors, that are at the moment not using any Dell gear and software (it doesn’t help they are not using any competitor’s offerings either). The changing services model can be addressed with new services offerings, re-skilling people at a realistic pace and innovating with new services for the modified landscape. So with some hard work and successful innovation Dell can do well in this scenario.
Fast move to public cloud (3 years) – Here we assume that in 3 years from now only the above 10-20% of enterprise load remain on premise. This scenario is not favorable for Dell, as the investment required to make this scenario happen, will happen with known technology decisions of the current public cloud vendors, that do create any or only very little revenue for Dell. R&D and innovation will be under massive time pressure to deliver in the next 3-6 quarters, something that is hard for any R&D organization. As a matter of fact, Dell has a showcase for this in house now, with VMware, that despite knowing enterprise load more intimately than any other vendor, was not able (so far) to capitalize in any substantial way from the move of enterprises load to the public cloud (barring e.g. the partnership with IBM, see here). So this scenario is most bearish on Dell.
Bonus Scenario – Continuous Asset Sale – This week’s news that OpenText is picking up EMC’s Content division, including Documentum (read here) reminded me of the option. Dell may sell non-strategic products and services along the way of its transformation, becoming leaner, meaner and potentially more focused on the ultimate prize. While it certainly will help the cash position, this constant sale is not helping to keep prices up, makes it hard for customers to understand what the new Dell really will be and is not positive on employee morale. An unlikely scenario in my view, but one to keep an eye on. It certainly would help if Dell declared what assets will be Dell ‘forever’ at least for the next 2-3 years to come, customer deserve to know and are sensitized to the topic, given the recent developments at HP.
So it all depends on the Trillion-dollar IT industry question – timing and volume of the move to public cloud infrastructure. We don’t debate the If anymore, but only the When. Dell will need time to make its offerings more attractive, the next quarters will tell us more on how fast enterprises are moving, and how fast Dell can innovate new attractive offerings for the more public cloud future. Stay tuned.
More on recent Market Move
More on Dell:
Want to learn more – here is the 1 slide update:
Want to read on here -you go:
When new companies are formed, the question is of course, what is their business model and market going forward, we take a look at 3 scenarios:
Nothing changes (in the private to public cloud ration) – Dell is no doubt well positioned, serving the existing level on premises / private cloud computing, not only providing all gear to build and operate a data center, but also important software that enterprises beyond that (e.g. think of Pivotal products, VMware EUC). Those enterprises that don’t want to run local data centers – there is a good / interesting offering with Virtustream. Dell also has a veritable services business that will not see turmoil, as buying decisions would support the status quo, as such giving time to fine tune services model. The only problem in this scenario: It never happens that nothing changes.
Slow move to public cloud (10 years till we reverse today) – Here we assume a slow move to public cloud, reversing that the 10-20% of enterprises load that is in the public cloud will be the level of private cloud / on premises remaining in 10 years. This scenario is still favorable to Dell, as it allows for Dell to build products and services that will be in demand of that transition. To a certain point the recent VMworld and EMC World events gave a glance into this area, where both vendors pointed out offerings that will make it easier for enterprises to move to the public cloud. The private nature of Dell, being shielded from quarterly earnings pressure, may also allow Dell to build the hardware and software it needs to equip the large public cloud vendors, that are at the moment not using any Dell gear and software (it doesn’t help they are not using any competitor’s offerings either). The changing services model can be addressed with new services offerings, re-skilling people at a realistic pace and innovating with new services for the modified landscape. So with some hard work and successful innovation Dell can do well in this scenario.
Fast move to public cloud (3 years) – Here we assume that in 3 years from now only the above 10-20% of enterprise load remain on premise. This scenario is not favorable for Dell, as the investment required to make this scenario happen, will happen with known technology decisions of the current public cloud vendors, that do create any or only very little revenue for Dell. R&D and innovation will be under massive time pressure to deliver in the next 3-6 quarters, something that is hard for any R&D organization. As a matter of fact, Dell has a showcase for this in house now, with VMware, that despite knowing enterprise load more intimately than any other vendor, was not able (so far) to capitalize in any substantial way from the move of enterprises load to the public cloud (barring e.g. the partnership with IBM, see here). So this scenario is most bearish on Dell.
Bonus Scenario – Continuous Asset Sale – This week’s news that OpenText is picking up EMC’s Content division, including Documentum (read here) reminded me of the option. Dell may sell non-strategic products and services along the way of its transformation, becoming leaner, meaner and potentially more focused on the ultimate prize. While it certainly will help the cash position, this constant sale is not helping to keep prices up, makes it hard for customers to understand what the new Dell really will be and is not positive on employee morale. An unlikely scenario in my view, but one to keep an eye on. It certainly would help if Dell declared what assets will be Dell ‘forever’ at least for the next 2-3 years to come, customer deserve to know and are sensitized to the topic, given the recent developments at HP.
MyPOV
It’s always good to try and win / fail that not trying at all (Roosevelt said something along the lines), so definitively kudos to Dell for engineering the largest merger in the high tech industry history and certainly trying. And the combined new Dell has a number of strong assets, it has the #1 PaaS product with CloudFoundry, it has a strong EUC and MDM portfolio in VMware, it has the leading hosting solution for hosting (older) SAP with Virtustream, that are clearly standing out. Then we get into the weaker or slowly fading areas of PCs [Dell points out that with over 62 million shipments in Q2 according to another analyst firm this is sizeable business, we agree, but the overall market is not growing.] , servers (at Dell) [Dell points out that the vendor just surpassed a key competitor in server shipments this Q2 according to another analyst firm to become #1, we still maintain that this is the shrinking on premises market.], virtualization (at VMware), Databases (at Pivotal) and converged on premise storage (EMC) and security (RSA). Some innovative R&D e.g. with Photon at VMware has peaked out in the past. A large part of the Dell business will be hardware, and despite Dell building market share with PCs, overall PC sales are slowly dwindling, and servers that Dell can built are commoditized to the point that the don’t need to be purchased from Dell (neither its competitors). The area to watch is if any of the large IaaS provider and maybe IBM will build data centers with Dell products. There are rumors of a Microsoft Azure data center being largely built on Dell, but if true and a success, I am sure Dell would have been out there already touting the benefits.So it all depends on the Trillion-dollar IT industry question – timing and volume of the move to public cloud infrastructure. We don’t debate the If anymore, but only the When. Dell will need time to make its offerings more attractive, the next quarters will tell us more on how fast enterprises are moving, and how fast Dell can innovate new attractive offerings for the more public cloud future. Stay tuned.
More on recent Market Move
- Market Move - Randstad to acquire Monster Worldwide - Bridges a moat, now it has to work - read here
- Market Move - Oracle acquires NetSuite - Oddly consolidation means more options for customers - read here
- Market Move - Microsoft acquired Linked - Tons of synergies, start with Cortana, maybe too many - read here
- Market Move - Oracle acquires Ravello Systems - makes good on nested hypervisor roadmap - read here
- Market Move - Atos completes acquisition of Unify - gets more into IP - read here
- Market Move - Dell plans to acquire EMC, VMware, Virtustream, Pivotal and more - read here
- Market Move - IBM acquires StrongLoop - nodejs comes to BlueMix - read here
More on Dell:
- Market Move - Dell plans to acquire EMC, VMware, Virtustream, Pivotal and more - read here
More on VMWare
- News Analysis - IBM and VMware announce partnership to accelerate enterprisehybrid cloud adoption - read here
- News Analysis - VMware unveils Workspace ONE – will the EUC adoption begin now? Read here
- Market Move - Dell plans to acquire EMC, VMware, Virtustream, Pivotal and more - read here
- Event Report - VMware VMworld 2015 - VMware stays the course - executes - progresses on fight for long term relevance - read here
- Musings – What will it be this year at VMWorld - read here
- Market Move - EMC to acquire Virtustream - More paths to the cloud - read here
- News Analysis - Pivotal makes CloudFoundry more about multi-cloud - read here
- News Analysis - Pivotal pivots to Open Source and Hortonworks - or: Open Source keeps winning - read here
- News Analysis - VMware makes progress towards the (hybrid) cloud - now let's watch the adoption - read here
- Speed Briefings at VMworld - read here
- Event Report - VMware makes a lot of progress - but the holy grail is still missing - read here.
- First Take - VMware's VMworld Day 1 Keynote - Top 3 Takeaways - read here.
- Progress Report - Good start for VMware EUC - time for 2nd inning - read here.
- Speed Briefings at VMworld - inside and outside the VMware ecosystem - read here.
- VMware defies conventional destiny - SDDC to the rescue - read here
More on Pivotal / Cloud Foundry
- Event Report - Pivotal SpringOne Platform - Spring in its 2nd spring - read here
- Event Report - Cloud Foundry Cloud Foundry Summit - It's good to be king of PaaS - read here
- News Analysis - Pivotal makes Cloud Foundry more about multi-cloud - read here
- News Analysis - Pivotal pivots to OpenSource and Hortonworks - Or: OpenSource keeps winning - read here
- New Analysis: Pivotal Now Makes It Easier Than Ever to Take Software from Idea to Production - read here