Friday, September 04, 2015

VMware, EMC ... the rumour mill is in fine flow.

In a discussion over China and the USA, the conversation turned to all the tech rumours floating around VMware & EMC. I shrugged my shoulders and said I retired from cloud almost five years ago and I have very little interest. 

Alas, people kept needling the point. 

Eventually, I added that I thought EMC had left it late to jettison VMware. I'd have looked to maximise the capital last year.  I had an old "Escape button" bet from 2009 that...

By the end of 2014, VMWare will have divided into two companies, one focused on existing virtualisation technology (IaaS Group) and the other focused on PaaS technology. The IaaS group will have been sold off to another company.

Now whilst I don't expect to win the bets, I do intend to get the direction of travel roughly right. Alas, whilst I expected an open source platform play and this to be broken out as a separate group which has happened with Pivotal, there has been no clear movement on spinning out the virtualisation business. Hence my bet was lost. I'm no fortune teller and so don't ask me what is going on with EMC and VMware.

Alas, people kept needling the point.

In annoyance, I explained that I took the view that EMC must suspect that everything from the virtualisation business to storage would be heading towards the cliff. I had anticipated that VCE would be a potential vehicle to extract EMC from this but alas that didn't gain traction. The timing a year ago seemed right with all the marketing about private and hybrid cloud being the future. This looked like a perfect pig in a poke play i.e. take a business that you anticipate will be disrupted, dress it up as the future and sell it for as much as possible. Nothing happened. As I said, I'm no fortune teller. When it comes to the rumours floating around VMware and EMC ... don't ask me, I haven't got a clue. 

Alas, people kept needling the point.

In frustration, I started drawing maps with endless muttering under my breath. I explained that if I was in Joe Tucci's position then I'd probably try something even more ambitious at this stage. Despite what you might think, a lot of the market is based upon sentiment about the future and if you make the story big enough then people can get carried away with it. The problem with just spinning out VMware is the market might well be suspicious. You'd need a reason, a conflict, a message - something like your own IaaS play creating conflict with the existing business. You'd need to somehow portray an image that you really want to hold onto it but alas, reluctantly you have to let it go. 

When I look around, there are a number of companies that I don't personally consider to be well positioned for the future - VMware, the storage components of EMC, Cisco, RedHat and HP. Most of these I view rather uncharitably as drowning men who don't just know it yet. However, just because I don't think they're well positioned doesn't mean I can't find a way of maximising return with a good enough story.

So, after about ten minutes I finished my scribbles and muttering. I looked up and said "Dry land is not just our destination, it is our destiny!"

In the film Waterworld, the Dean muttered these immortal worlds because with a good enough story, you can get everyone rowing in the right direction without anyone asking the awkward questions. For me, that story would be around converged infrastructure. 

Behind the scenes I'd be working on a play for a merger between VMware, Cisco and the soon to be split off Enterprise component of HP combined with an acquisition of EMC storage and EMC stock in VMware and possibly even acquisition of RedHat all funded through debt. Well, if you're going to go all out then make it as large a play as possible.

For me, this gets EMC off the hook at top dollar and the new vehicle portrays a big enough story that the market will get excited about the beast without considering that many of the components are going to have a tough time in cloud. I could spin the story of synergy between the groups, converged infrastructure, one stop shop, large enterprise customer base, efficiency, hybrid environments combining HP, Cisco and VMware capabilities and a host of other reasons under a tagline of the future. I could do this until the cows come home which by my reckoning means in the next 18 months, before the cloud battle gets too horrific. I could craft a story here that the Dean would be proud of, the troops would get excited about and just hide the map from prying eyes.

Do I think it would be a good idea? Of course not and for two reasons. Firstly, I spent about ten minutes on it. Secondly, even that ten minutes told me it is about as daft as you can get in my book. Drowning men grabbing hold of each other doesn't solve the problem of drowning. But could I sell the story to the market and get away with it? Probably.

But then I'm not involved in any of those companies nor do I have any idea of what plans they might have or not. As far I can tell, the stories about VMware and EMC are all rumours and I've little interest in investigating. At best, you can consider the rumours to be nothing more than a weak signal that someone, somewhere is exploring something. Who, what? ... no idea, don't care. Ask a fortune teller.
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