4 ms·

Dell has maintained a relatively legit bond rating...this will certainly change things. Their cost of capital will increase, and I'm not quite sure I ne'er stan

Dell has maintained a relatively legit bond rating...this will certainly change things. Their cost of capital will increase, and I'm not quite sure I ne'er stand the strategic value in the acquisition... Why not just partner/jv it?

vessenes 11y ago
See my post below. How do you propose Dell stay relevant against the Quanta's of the world without an aggressive cloud offering that looks up to scratch with at least Azure? The business could easily be worthless in N years without this. I actually thought this was a smart plan, one I wouldn't have thought of until I heard the news.
einrealist 11y ago
Maybe, they will transform from a hardware to a cloud infrastructure company. Because many companies are moving applications into the cloud and buying less servers or or just avoid or give up on custom data centers at all. VMWare may be the key.
- derefr 11y ago
  I get the sense that everyone in the big-metal hardware market (Dell, HP, IBM) is scared of something like Open Compute driving them to irrelevancy. They're all teching up to own some key piece of the IaaS space instead. VMWare is a nice keystone for that.
  - xorcist 11y ago
    VMware is also scared of SDNs and public cloud infrastructure. They try to remain relevant, and they may have an easier path forward than Dell and HP, but their business model is built on virtualizing old Windows boxes. It's the stepping stone for businesses as they virtualize their infrastructure. Just move off physical boxes and into the VMware cloud. But that's quite different from native-cloud applications. Right now you may need to incorporate VMware in your deployment toolchain, but it won't stay that way forever. None of the big public clouds (Google, Amazon etc.) run on VMware, and I wouldn't want to bet on internal virtualization infrastructure going the other way.
    - Karunamon 11y ago
      Furthermore, integrating anything VMWare without paying extra for their (clunky, limited) solutions is painful. I say this as someone that's writing a deployment toolkit for internal use. Their API is an ill-thought-out, illogical, and painful mess, and the more cynical side of me believes it to be that way on purpose. It's harder to get commoditized if you're harder to interop with. Then again, it could just be cultural. It took years of people complaining about the awfulness of their web based admin tool before they decided to take those complaints onboard and deal with them; and those were the admins who have to use the thing every day, a much louder and larger group than annoyed developers.
      - switch007 11y ago
        Have you checked out tools such as Ansible and Salt? They've done a lot of the hard work for many common operations in vsphere. http://docs.ansible.com/ansible/vsphere_guest_module.html http://docs.ansible.com/ansible/vsphere_guest_module.html https://docs.saltstack.com/en/latest/ref/clouds/all/salt.cloud.clouds.vmware.html https://docs.saltstack.com/en/latest/ref/clouds/all/salt.clo...
        Karunamon 11y ago
        Believe it or not, Ansible is what I'm using right now. Except wrapping a friendly web-app around the deployment bits. My hat is off to their developers, about an hour of dealing directly with VMWare SOAP API was a prelude to a migraine.
    - mcintyre1994 11y ago
      They've actually started their own public cloud claiming to directly compete with Azure and AWS: http://vcloud.vmware.com/ http://vcloud.vmware.com/
- Spooky23 11y ago
  EMC/VCE tried that already. Didn't work so great outside of niche markets.
- devonkim 11y ago
  The common theme with these hardware makers trying to move to cloud infrastructure services is that they all fail primarily because these companies are so poor at software in comparison. People like to say that Apple is bad at services, but they are far, far better at delivering mass-scale services like iMessages and iCloud than HP or surprisingly even Cisco could (forget Webex, they were acquired in and service availability has dropped like a rock when they were industry-leading after Velchamy left for VMware). The fundamentals of cloud services of any kind is that it is a service and that means well-defined continuous operational models with tons of software-defined and enforced methods. This is just not in the DNA of most of the large hardware vendors.
  - pm90 11y ago
    This analysis is spot on. I think the fundamental idea here is to use VMWare's excellent products as a gateway into the cloud. In theory, it should work out really well. But like you said, I'm rather skeptical that Dell can actually deliver great software.
- CrazyCatDog 11y ago
  Folks, We are not yet in a world where cloud > local for the top 45% of Dell's most profitable customers (think big, very big). And if we ever get there, I don't think they will be looking to Dell/VM for a solution. Those "whales" are going to want a more integrated solution, so Amazon, Google, and Msft will take their cloud services one step further--further away than Dell/VM will ever be able to take it: dedicated fiber for their largest customers. How? Any of these three can lour their existing client base as bait and cut a deal with the Verizon and ATTs of the world for bulk (dedicated) bandwidth purchases. And if they don't have enough existing clients (Azure) they can post a cash-bond guaranteeing revenues to the telecom (just like msft did with the record companies to sell music in Win8). At any rate, when your borrowing cost is exponential, and you have no cloud business to speak of, you won't be able to take your services to that next level. I may end up eating my words here, but this is too little too late for Dell--the beginning of the end if you will. This is not financial engineering, but rather Silverlake and EMC denying reality, or at least postponing it until they can each cash out.
  - koko775 11y ago
    > We are not yet in a world where cloud > local for the top 45% of Dell's most profitable customers (think big, very big). And if we ever get there, I don't think they will be looking to Dell/VM for a solution. > Those "whales" are going to want a more integrated solution, so Amazon, Google, and Msft will take their cloud services one step further--further away than Dell/VM will ever be able to take it: dedicated fiber for their largest customers. How? Any of these three can lour their existing client base as bait and cut a deal with the Verizon and ATTs of the world for bulk (dedicated) bandwidth purchases. And if they don't have enough existing clients (Azure) they can post a cash-bond guaranteeing revenues to the telecom (just like msft did with the record companies to sell music in Win8). You're kidding, right? Dell has provided the solutions for two of those three companies. The datacenter segment of their business is both successful and demolishing its only real competitor: a crumbling HP. Dell's able to build and deliver ridiculously energy efficient datacenters at scale, very quickly. And they do, for Microsoft, eBay, and a number of other companies. Their competitive advantage on the hardware side is substantial. Controlling VMWare would catapult the software side of things very, very far forward. If they want to build a new cloud platform, they've got extremely strong fundamentals to launch it from. If not, well, they'll probably power whoever does build it in some way (and profit handsomely).

vessenes 11y ago

See my post below. How do you propose Dell stay relevant against the Quanta's of the world without an aggressive cloud offering that looks up to scratch with at least Azure? The business could easily be worthless in N years without this. I actually thought this was a smart plan, one I wouldn't have thought of until I heard the news.

einrealist 11y ago

Maybe, they will transform from a hardware to a cloud infrastructure company. Because many companies are moving applications into the cloud and buying less servers or or just avoid or give up on custom data centers at all. VMWare may be the key.

derefr 11y ago
I get the sense that everyone in the big-metal hardware market (Dell, HP, IBM) is scared of something like Open Compute driving them to irrelevancy. They're all teching up to own some key piece of the IaaS space instead. VMWare is a nice keystone for that.
- xorcist 11y ago
  VMware is also scared of SDNs and public cloud infrastructure. They try to remain relevant, and they may have an easier path forward than Dell and HP, but their business model is built on virtualizing old Windows boxes. It's the stepping stone for businesses as they virtualize their infrastructure. Just move off physical boxes and into the VMware cloud. But that's quite different from native-cloud applications. Right now you may need to incorporate VMware in your deployment toolchain, but it won't stay that way forever. None of the big public clouds (Google, Amazon etc.) run on VMware, and I wouldn't want to bet on internal virtualization infrastructure going the other way.
  - Karunamon 11y ago
    Furthermore, integrating anything VMWare without paying extra for their (clunky, limited) solutions is painful. I say this as someone that's writing a deployment toolkit for internal use. Their API is an ill-thought-out, illogical, and painful mess, and the more cynical side of me believes it to be that way on purpose. It's harder to get commoditized if you're harder to interop with. Then again, it could just be cultural. It took years of people complaining about the awfulness of their web based admin tool before they decided to take those complaints onboard and deal with them; and those were the admins who have to use the thing every day, a much louder and larger group than annoyed developers.
    - switch007 11y ago
      Have you checked out tools such as Ansible and Salt? They've done a lot of the hard work for many common operations in vsphere. http://docs.ansible.com/ansible/vsphere_guest_module.html http://docs.ansible.com/ansible/vsphere_guest_module.html https://docs.saltstack.com/en/latest/ref/clouds/all/salt.cloud.clouds.vmware.html https://docs.saltstack.com/en/latest/ref/clouds/all/salt.clo...
      - Karunamon 11y ago
        Believe it or not, Ansible is what I'm using right now. Except wrapping a friendly web-app around the deployment bits. My hat is off to their developers, about an hour of dealing directly with VMWare SOAP API was a prelude to a migraine.
  - mcintyre1994 11y ago
    They've actually started their own public cloud claiming to directly compete with Azure and AWS: http://vcloud.vmware.com/ http://vcloud.vmware.com/
Spooky23 11y ago
EMC/VCE tried that already. Didn't work so great outside of niche markets.
devonkim 11y ago
The common theme with these hardware makers trying to move to cloud infrastructure services is that they all fail primarily because these companies are so poor at software in comparison. People like to say that Apple is bad at services, but they are far, far better at delivering mass-scale services like iMessages and iCloud than HP or surprisingly even Cisco could (forget Webex, they were acquired in and service availability has dropped like a rock when they were industry-leading after Velchamy left for VMware). The fundamentals of cloud services of any kind is that it is a service and that means well-defined continuous operational models with tons of software-defined and enforced methods. This is just not in the DNA of most of the large hardware vendors.
- pm90 11y ago
  This analysis is spot on. I think the fundamental idea here is to use VMWare's excellent products as a gateway into the cloud. In theory, it should work out really well. But like you said, I'm rather skeptical that Dell can actually deliver great software.
CrazyCatDog 11y ago
Folks, We are not yet in a world where cloud > local for the top 45% of Dell's most profitable customers (think big, very big). And if we ever get there, I don't think they will be looking to Dell/VM for a solution. Those "whales" are going to want a more integrated solution, so Amazon, Google, and Msft will take their cloud services one step further--further away than Dell/VM will ever be able to take it: dedicated fiber for their largest customers. How? Any of these three can lour their existing client base as bait and cut a deal with the Verizon and ATTs of the world for bulk (dedicated) bandwidth purchases. And if they don't have enough existing clients (Azure) they can post a cash-bond guaranteeing revenues to the telecom (just like msft did with the record companies to sell music in Win8). At any rate, when your borrowing cost is exponential, and you have no cloud business to speak of, you won't be able to take your services to that next level. I may end up eating my words here, but this is too little too late for Dell--the beginning of the end if you will. This is not financial engineering, but rather Silverlake and EMC denying reality, or at least postponing it until they can each cash out.
- koko775 11y ago
  > We are not yet in a world where cloud > local for the top 45% of Dell's most profitable customers (think big, very big). And if we ever get there, I don't think they will be looking to Dell/VM for a solution. > Those "whales" are going to want a more integrated solution, so Amazon, Google, and Msft will take their cloud services one step further--further away than Dell/VM will ever be able to take it: dedicated fiber for their largest customers. How? Any of these three can lour their existing client base as bait and cut a deal with the Verizon and ATTs of the world for bulk (dedicated) bandwidth purchases. And if they don't have enough existing clients (Azure) they can post a cash-bond guaranteeing revenues to the telecom (just like msft did with the record companies to sell music in Win8). You're kidding, right? Dell has provided the solutions for two of those three companies. The datacenter segment of their business is both successful and demolishing its only real competitor: a crumbling HP. Dell's able to build and deliver ridiculously energy efficient datacenters at scale, very quickly. And they do, for Microsoft, eBay, and a number of other companies. Their competitive advantage on the hardware side is substantial. Controlling VMWare would catapult the software side of things very, very far forward. If they want to build a new cloud platform, they've got extremely strong fundamentals to launch it from. If not, well, they'll probably power whoever does build it in some way (and profit handsomely).