buchachon - Fotolia

VMware CEO talks up growth opportunities on back of Dell-EMC merger

With Dell set to close its acquisition of EMC on 7 September 2016, VMware CEO talks up the benefits of the deal for VMware and its customers

VMware CEO Pat Gelsinger has moved to assure customers the company’s future is looking bright, ahead of the impending closure of the much-hyped Dell-EMC mega-merger.

During a press question and answer session at VMworld US in Las Vegas, Gelsinger was joined on stage by Michael Dell to discuss how VMware looks set to benefit from Dell acquiring its parent company, EMC, by opening up cross-selling opportunities and expanding its geographical reach.

Once the acquisition is complete, and EMC starts trading under its new title of Dell Technologies, VMware estimates the union will eventually add around $1bn to its bottom line, said Gelsinger.

“We’re a $7bn software company [right now], and we’re excited we have this big engine cheering us on in the marketplace,” he said.

With line of business units now responsible for driving a growing proportion of IT purchases in the enterprise, this has the potential to open up new sources of revenue for Dell and VMware.

“In many cases that opens up budgets that aren’t available to the IT purchaser and that’s powerful,” said Gelsinger.

“A key piece of our selling motion now is how do we [help the] CIOs and IT buyers that we’ve traditionally been selling to, and help them partner with the line of business leaders they’re trying to serve and need to serve.”

Some of the projected $1bn sum will be realised through “co-innovation” initiatives and product launches, as both companies work together to negotiate the shift in IT buying power away from CIOs to line of business units.

“As we built the model for that billion dollars, we looked across the full range of VMware products, and there are a lot of second and third tier markets that we haven’t penetrated yet,” said Gelsinger.

“Michael sells a lot of servers, let’s put more disk and flash into them and value-add software.”

The deal, which is set to be the largest acquisition in enterprise IT history, is set to close on 7 September 2016, now China’s Ministry of Commerce (Mofcom) has finally given both parties the all-clear to proceed.

Read more about VMware

Since news of the proposed merger first broke in October 2015, VMware has repeatedly emphasised that – despite the change in ownership – it will remain a publicly traded, independent company.

Despite these assurances, VMware saw its share price fall to its lowest level since 2013, according to a 451 Research post published in the wake of the deal.

VMware’s executives have repeatedly talked up the importance of the company’s ecosystem of supplier partners during numerous sessions at VMworld US 2016, when it comes to realising its multi-cloud and user computing strategies.

The overarching aim of this is to allow enterprises the freedom to run applications in any cloud and on any device.

Gelsinger said the acquisition has the potential to open up further opportunities for the company to expand its supplier ecosystem by allowing it to forge close ties with technology companies Dell has long-standing relationships with.

As an example of this, Gelsinger pointed to Dell’s historical dealings with Microsoft on the PC side, and how this could potentially help drive sales of its Airwatch enterprise mobility management platform among enterprise Windows users.

Gelsinger also stated that VMware will remain free to partner with Dell’s competitors if it makes strategic and financial sense for it to do so, as an example of how its independence will be retained while under new ownership. 

To back this point, Gelsinger said Dell had been quick to approve a proposed partnership between VMware and IBM because of the potential it had to accelerate the former party’s growth.

“IBM is not a particularly great partner for Dell,” said Gelsinger. “They compete in different areas. Michael and I had a conversation and we discussed it with VMware board, and Michael said it’s good for VMware and we should do it.” 

Read more on Virtualisation management strategy