The question about what’s next for Dell Technologies and VMware has captured imaginations — and the rumor mill — since the companies confirmed they are mulling a merger, among other “potential business opportunities.”
Will Dell Technologies, the world’s largest privately held technology company, go public? Will it buy the rest of VMware, arguably the crown jewel of its brand portfolio? Or will VMware buy out Dell Technologies in a reverse merger, allowing it to become a publicly traded company without a formal initial public offering?
While we don’t know the answers, it’s fun to speculate wildly and pick winners and losers in potential transactions. One winner that no one seems to be talking about is Nutanix.
Hear me out on this. Let’s say Dell Technologies and VMware merge. And they also marry VMware’s virtualization and hybrid cloud software to Dell EMC hardware. This might mean VMware wouldn’t mix with other hardware providers as it currently does. And Dell EMC might dump other hyperconverged and hybrid cloud software stacks like Nutanix — which was recently named the top HCI leader in Gartner’s first-ever Magic Quadrant for Hyperconverged Infrastructure.
For the record: Dell EMC, VMware, and Hewlett Packard Enterprise (HPE) also landed in the “leaders” quadrant, but Nutanix ranked higher than its three competitors.
Dell EMC already enjoys a cozy relationship with VMware’s software stack. But it also gainfully partners with Nutanix and Microsoft, among others. VMware runs on all the leading hardware providers.
If Dell Technologies and VMware merge and push a Dell-VMware only product, their former partners will look elsewhere for love.
Enter Nutanix. The company has been gunning for VMware over the past year with its HCI and hybrid cloud software stack. On its most recent earnings call, Nutanix CEO Dheeraj Pandey said the company will move to a software-only business model, like that of VMware.
Today, Nutanix sells its data center software stack on its own branded servers. Customers can also run Nutanix’s operating system (OS) on hardware from Dell EMC, Cisco, HPE, IBM, Lenovo, and other vendors. Taking Dell EMC off the list still gives Nutanix’s customers options.
“We are now seeing enterprises of all sizes, across all industries, embrace our pioneering HCI solution as a fundamental element of their multi-cloud architectures,” Pandey said in a statement about the Gartner HCI Magic Quadrant. “And combined with the Nutanix Enterprise Cloud OS, we feel our mission is freeing customers to build their infrastructure, run their applications, and choose their cloud platform — all on their terms, not a vendor’s lock-in agenda.”
Scott Sinclair, an ESG analyst, said Nutanix would “absolutely” come out a winner if VMware became a Dell-only shop.
“Right now, every infrastructure provider validates and tests their stuff with VMware,” he said. “They have go-to market plans. They train the resellers and direct salesforce on here’s how our technology works with VMware. If VMware said we are going to be a Dell-only shop, for example, and prioritize Dell, eventually they [other infrastructure providers] would need a plan B. You have all these sales guys pitching VMware as a default; now they would need to pitch someone else.”
Nutanix would be more than happy to be that someone else.
“A huge portion of VMware’s value is its independence from any one infrastructure provider,” Sinclair said. And because of that, it is in both VMware and Dell Technologies’ best interest to maintain that infrastructure-agnostic software strategy, he added.
“Regardless of what Dell Technologies chooses to do, the end result has to be that VMware interacts with the rest of the industry and its customers as if it was independent,” he explained. “At the end of the day, any merger or combination of the two companies just becomes a financial [deal]. The people that would be impacted are the accountants.”
IDC analyst Matt Eastwood said it wouldn’t make sense for VMware to buy the whole Dell Technologies shop.
“I actually see something happening that’s maybe a little less dynamic,” he said. “I could see VMware buying pieces of Dell and bringing those under its umbrella, and providing Dell Technologies with additional cash to retire more of its debt.”
“The challenge is, if you were talking to Dell executives — including Michael Dell — I think they see Pivotal as the single biggest asset they can unlock value around,” Eastwood said. “But today it’s still fairly complex to stand up, and probably not at a point where it has reached optimum or peak value. I don’t think they want to put Pivotal in play yet. It could be worth already $8 billion, $9 billion.”
Both analysts are quick to point out that they have no insider information about what Dell Technologies and VMware will ultimately decide to do.
Unfortunately for us here at SDxCentral, neither do we. But that doesn’t mean we can’t prop up different scenarios and imagine how they might play out. And if the two companies do combine and Nutanix comes out a winner in the long run? Well, you heard it here first.