Tag Archives: Dell

Broadening Your Horizons, or Why Broadcom Won’t Get VMware

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You might have missed the news over the weekend that Broadcom is in talks to buy VMware. As of right now this news is still developing so there’s no way of knowing exactly what’s going to happen. But I’m going to throw my hat into the ring anyway. VMware is what Broadcom really wants and they’re not going to get it.

Let’s break some of this down.

Broad Street

Broadcom isn’t just one of the largest chip manufactures on the planet. Sure, they make networking hardware that goes into many of the products you buy. Yes, they do make components for mobile devices and access points and a whole host of other things, including the former Brocade fibre channel assets. So they make a lot of chips.

However, starting back in November 2018, Broadcom has been focused on software acquisitions. They purchased CA Technologies for $19 billion. They bought Symantec the next year for $10 billion. They’re trying to assemble a software arm to work along with their hardware aspirations. Seems kind of odd, doesn’t it?

Ask IBM how it feels to be the dominant player in mainframes. Or any other dominant player in a very empty market. It’s lonely and boring. And boring is the exact opposite of what investors want today. Mainframes and legacy computing may be the only thing keeping IBM running right now. And given that Broadcom’s proposed purchase of Qualcomm was blocked a few years ago you can see that Broadcom is likely at the limit of what they’re going to be able to do with chipsets.

Given the explosion of devices out there you’d think that a chip manufacturer would want to double and triple down on development, right? Especially given the ongoing chip shortage. However, you can only iterate on those chips so many times. There’s only so much you can squeeze before you run out of juice. Ask Intel and AMD. Or, better yet, see how they’ve acquired companies to diversify into things like FPGAs and ARM-based DPUs. They realize that CPUs alone aren’t going to drive growth. There have to be product lines that will keep the investor cash flowing in. And that doesn’t come from slow and steady business.

Exciting and New

VMware represents a huge potential business arena for Broadcom. They get to jump into the data center with both feet and drive hybrid cloud deployments. They can be a leader in the on-prem software market overnight with this purchase. Cloud migrations take time. Software needs to be refactored. And that means running it in your data center for a while until you can make it work in the cloud. You could even have software that is never migrated for technical or policy-based reasons.

However, that very issue is going to cause problems for VMware and Broadcom. Is there a growth market in the data center in an enterprise? Do you see companies adding new applications and resources to their existing enterprise data centers? Or do you see them migrating to the cloud first? Do you imagine given the choice between building more compute cluster in the existing hybrid data center or developing for the cloud the first time that companies are going to choose the former?

To me, the quandary of VMware isn’t that different from the one faced by IBM. Yes, you can develop new applications to run on mainframes or on-prem data centers. But you can also not do that too. Which means you have to persuade people to use your technology. Maybe it’s for ease-of-management for existing operations teams. Could be an existing relationship that allows you to execute faster. But no matter what choice you make you’re incurring some form of technical debt when you choose to use existing technology to do something that could also be accomplished with new ideas.

Know who else hates the idea of technical debt and slow steady growth? That’s right, investors. They want flashy year-over-year numbers every quarter to prove they’re right. They want to see that stock price climb so they can eventually sell it and invest in some other growth market. Gone are the days when people were proud to own a bit of company and see it prosper over time. Instead, investors have a vision that lasts about 90 days and is entirely focused on the bottom line. If you aren’t delivering growth you don’t have value. It’s not even about making money any more. You have to make more all the time.

The Broad Elephant

The two biggest shareholders of VMware would love to see it purchased for a ton of money. Given the current valuation north of $40 billion, Dell and Silver Lake would profit handsomely from a huge acquisition. That could be used to pay down even more debt and expand the market for Dell solutions. So they’re going to back it if the numbers look good.

The other side of this equation is the rest of the market that thinks Broadcom’s acquisition is a terrible idea. Twitter is filled with analysts and industry experts talking about how terrible this would be for VMware customers. Given that Symantec and CA haven’t really been making news recently would tend to lend credence to that assessment.

The elephant in the room is what happens when customers don’t want VMware to sell? Sure, if VMware is allowed to operate as an independent entity like it was during the EMC Federation days things are good. They’ll continue to offer support and make happy customers. However, there is always the chance something will change down the road and force the status quo to change. And that’s the thing no one wants to talk about. Does VMware reject a very good offer in favor of autonomy? They just got out from under the relationship with Dell Technologies that was odd to say the least. Do they really want to get snapped up right away?

Tom’s Take

My read on this is simple but likely too simple. Broadcom is going to make a big offer based on stock price so they can leverage equity. The market has already responded favorably to the rumors. Dell and Silver Lake will back the offer because they like the cash to change their leverage situation. Ultimately, regulators will step in and decide the deal. I’m betting the regulators will say “no” like they did with Qualcomm. When the numbers are this big there are lots of eyeballs on the deal.

Ultimately Broadcom may want VMware and the biggest partners may be on board with it. But I think we’re going to see it fall apart because the approvals will either take too long and the stock price will fall enough to make it no longer worth it or the regulators will just veto the deal outright. Either way we’re going to be analyzing this for months to come.

Will Dell Networking Wither Away?

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The behemoth merger of Dell and EMC is nearing conclusion. The first week of August is the target date for the final wrap up of all the financial and legal parts of the acquisition. After that is done, the long task of analyzing product lines and finding a way to reduce complexity and product sprawl begins. We’ve already seen the spin out of Quest and Sonicwall into a separate entity to raise cash for the final stretch of the acquisition. No doubt other storage and compute products are going to face a go/no go decision in the future. But one product line which is in real danger of disappearing is networking.

Whither Whitebox?

The first indicator of the problems with Dell and networking comes from whitebox switching. Dell released OS 10 earlier this year as a way to capitalize on the growing market of free operating systems running on commodity hardware. Right now, OS 10 can run on Dell equipment. In the future, they are hoping to spread it out to whitebox devices. That assumes that soon you’ll see Dell branded OSes running on switches purchased from non-Dell sources booting with ONIE.

Once OS 10 pushes forward, what does that mean for Dell’s hardware business? Dell would naturally want to keep selling devices to customers. Whitebox switches would undercut their ability to offer cheap ports to customers in data center deployments. Rather than give up that opportunity, Dell is positioning themselves to run some form of Dell software on top of that hardware for management purposes, which has always been a strong point for Dell. Losing the hardware means little to Dell if they have to lose profit margin to keep it there in the first place.

The second indicator of networking issues comes from comments from Michael Dell at EMCworld this year. Check out this short video featuring him with outgoing EMC CEO Joe Tucci:

Some of the telling comments in here involve Michael Dell’s praise for the NSX business model and how it is being adopted by a large number of other vendors in the industry. Also telling is their reaffirmation that Cisco is an important partnership in VCE and won’t be going away any time soon. While these two things don’t seem to be related on the surface, they both point to a truth Dell is trying hard to accept.

In the future, with overlay network virtualization models gaining traction in the data center, the underlying hardware will matter little. In almost every case, the hardware choice will come down to one of two options:

  1. Which switch is the cheapest?
  2. Which switch is on the Approved List?

That’s it. That’s the whole decision tree. No one will care what sticker is on the box. They will only care that it didn’t cost a fortune and that they won’t get fired for buying it. That’s bad for companies that aren’t making white boxes or named Cisco. Other network vendors are going to try and add value in some way, but the overlay sitting on top of those bells and whistles will make it next to impossible to differentiate in anything but software. Whether that’s superior management capabilities, open plug-in model, or some other thing we haven’t thought of will make no difference in the end. Software will still be king and the hardware will be an inexpensive pawn or a costly piece that has been pre-approved.

Whither Wireless?

The other big inflection point that makes me worry about the Dell networking story is the lack of movement in the wireless space. Dell has historically been a company to partner first and acquire second. But with HPE’s acquisition of Aruba Networks last year, the dominos in the wireless space are still waiting to fall. Brocade raced out to buy Ruckus. Meru offered itself on a platter to anyone that would buy them. Now Aerohive stands as the last independent wireless vendor without a dance partner. Yes, they’ve announced that they are partnering with Dell, but have you been to the Dell Wireless Networking page? Can you guess what the Dell W-series is? Here’s a hint: it rhymes with “Peruba”.

Every time Dell leads with a W-series deployment, they are effectively paying their biggest competitor. They are opening the door to allowing HPE/Aruba to come in and not only start talking about wireless but servers, storage, and other networking as well. Dell would do well at this point to start deemphasizing the W-series and start highlighting the “new generation” of Aerohive APs and how they are going to the be the focus moving forward.

The real solution would be for Dell to buy a wireless company and take all the wireless expertise they are selling in-house. That would show they are serious about both the campus network of the future and the data center network needed to support their other server and storage infrastructure. Sadly, with Dell being leveraged due to the privatization of his company just two years ago and mounting debt for this mega merger, Dell is looking to make cash with spin offs instead of spending it on yet another company to ingest and subsume. Which means a real non-partner wireless solution is still many years away.

Tom’s Take

Dell’s networking strategy is in maintenance mode. Make switches to support faster speeds for now, probably with Tomahawk support soon, and hope that this whole networking thing goes software sooner rather than later. Otherwise, the need to shore up the campus wireless areas along with the coming decision about showing support fully behind NSX and partnerships is going to be a bitter pill to swallow. Perhaps Dell Networking will exist as an option for companies wanting a 100% Dell solution? Or maybe they are waiting for a new offering from Dell/EMC in the data center to drive profits to research and development to keep pace with Cisco and Arista? One can only hope that their networking flower doesn’t wither on the vine.

The Tortoise and the Austin Hare

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Dell announced today the release of their newest network operating system, OS10 (note the lack of an X). This is an OS that is slated to build on the success that Dell has had selling 3rd party solutions from vendors like Cumulus Networks and Big Switch. OS10’s base core will be built on an unmodified Debian distro that will have a “premium” feature set that includes layer 2 and layer 3 functionality. The aim to have a fully open-source base OS in the networking space is lofty indeed, but the bigger question to me is “what happens to Cumulus”?

Storm Clouds

As of right this moment, before the release of Dell OS10, the only way to buy Linux on a Dell switch is to purchase it with Cumulus. In the coming months, Dell will begin to phase in OS10 as an option in parallel with Cumulus. This is especially attractive to large environments that are running custom-built networking today. If your enterprise is running Quagga or sFlow or some other software that has been tweaked to meet your unique needs you don’t really need a ton of features wrapped in an OS with a CLI you will barely use.

So why introduce an OS that directly competes with your partners? Why upset that apple cart? It comes down to licenses. Every time someone buys a Dell data center switch, they have to pick an OS to run on it. You can’t just order naked hardware and install your own custom kernel and apps. You have to order some kind of software. When you look at the drop-down menu today you can choose from FTOS, Cumulus, or Big Switch. For the kinds of environments that are going to erase and reload anyway the choice is pointless. It boils down to the cheapest option. But what about those customers that choose Cumulus because it’s Linux?

Customers want Linux because they can customize it to their heart’s content. They need access to the switching hardware and other system components. So long as the interface is somewhat familiar they don’t really care what engine is driving it. But every time a customer orders a switch today with Cumulus as the OS option, Dell has to pay Cumulus for that software license. It costs Dell to ship Linux on a switch that isn’t made by Dell.

OS10 erases that fee. By ordering a base image that can only boot and address hardware, Dell puts a clean box in the hands of developers that are going to be hacking the system anyway. When the new feature sets are released later in the year that increase the functionality of OS10, you will likely see more customers beginning to experiment with running Linux development environments. You’ll also see Dell beginning to embrace a model that loads features on a switch as software modules instead of purpose-built appliances.

Silver Lining

Dell’s future is in Linux. Rebuilding their OS from the ground up to utilize Linux only makes sense given industry trends. Junos, EOS, and other OSes from upstarts like Pluribus and Big Switch are all based on Linux or BSD. Reinventing the wheel makes very little sense there. But utilizing the Switch Abstraction Interface (SAI) developed for OpenCompute gives them an edge to focus on northbound feature development while leaving the gory details of addressing hardware to the abstraction talking to something below it.

Dell isn’t going to cannibalize their Cumulus partnership immediately. There are still a large number of shops running Cumulus that a are going to want support from their vendor of choice in the coming months. Also, there are a large number of Dell customers that aren’t ready to disaggregate hardware from software radically. Those customers will require some monitoring, as they are likely to buy the cheapest option as opposed to the best fit and wind up with a switch that will boot and do little else to solve network problems.

In the long term, Cumulus will continue to be a fit for Dell as long as OS10 isn’t ported to the Campus LAN. Once that occurs, you will likely see a distancing of these two partners as Dell embraces their own Linux OS options and Cumulus moves on to focus on using whitebox hardware instead of bundling themselves with existing vendors. Once the support contracts expire on the Cumulus systems supported by Dell, I would expect to see a professional services offering to help those users of Cumulus-on-Dell migrate to a “truly open and unmodified kernel”.

Tom’s Take

Dell is making strides in opening up their networking with Linux and open source components. Juniper has been doing it forever, and HP recently jumped into the fray with OpenSwitch. Making yourself open doesn’t solve your problems or conjure customers out of thin air. But it does give you a story to tell about your goals and your direction. Dell needs to keep their Cumulus partnerships going forward until they can achieve feature parity with the OS that currently runs on their data center switches. After that happens and the migration plans are in place, expect to see a bit of jousting between the two partners about which approach is best. Time will tell who wins that argument.

 

 

My Thoughts on Dell, EMC, and Networking

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The IT world is buzzing about the news that Dell is acquiring EMC for $67 billion. Storage analysts are talking about the demise of the 800-lb gorilla of storage. Virtualization people are trying to figure out what will happen to VMware and what exactly a tracking stock is. But very little is going on in the networking space. And I think that’s going to be a place where some interesting things are going to happen.

It’s Not The Network

The appeal of the Dell/EMC deal has very little to do with networking. EMC has never had any form of enterprise networking, even if they were rumored to have been looking at Juniper a few years ago. The real networking pieces come from VMware and NSX. NSX is a pure software networking implementation for overlay networking implemented in virtualized networks.

Dell’s networking team was practically nonexistent until the Force10 acquisition. Since then there has been a lot of work in building a product to support Dell’s data center networking aspirations. Good work has been done on the hardware front. The software on the switches has had some R&D done internally, but the biggest gains have been in partnerships. Dell works closely with Cumulus Networks and Big Switch Networks to provide alternative operating systems for their networking hardware. This gives users the ability to experiment with new software on proven hardware.

Where does the synergy lie here? Based on a conversation I had on Monday there are some that believe that Cumulus is a loser in this acquisition. The idea is that Dell will begin to use NSX as the primary data center networking piece to drive overlay adoption. Companies that have partnered with Dell will be left in the cold as Dell embraces the new light and way of VMware SDN. Interesting idea, but one that is a bit flawed.

Maybe It’s The Network

Dell is going to be spending a lot of time integrating EMC and all their federation companies. Business needs to continue going forward in other areas besides storage. Dell Networking will see no significant changes in the next six months. Life goes on.

Moving forward, Dell Networking is still an integral piece of the data center story. As impressive as software networking can be, servers still need to plug into something. You can’t network a server without a cable. That means hardware is still important even at a base level. That hardware needs some kind of software to control it, especially in the NSX model without a centralized controller deciding how flows will operating on leaf switches. That means that switches will still need operating systems.

The question then shifts to whether Dell will invest heavily in R&D for expanding FTOS and PowerConnect OS or if they will double down on their partnership with Cumulus and Big Switch and let NSX do the heavy lifting above the fray. The structure of things would lead one to believe that Cumulus will get the nod here, as their OS is much more lightweight and enables basic connectivity and control of the switches. Cumulus can help Dell integrate the switch OS into monitoring systems and put more of the control of the underlay network at the fingertips of the admins.

I think Dell is going to be so busy integrating EMC into their operations that the non-storage pieces are going to be starved for development dollars. That means more reliance on partnerships in the near term. Which begets a vicious cycle that causes in-house software to fall further and further behind. Which is great for the partner, in this case Cumulus.

By putting Dell Networking into all the new offerings that should be forthcoming from a combined Dell/EMC, Dell is putting Cumulus Linux in a lot of data centers. That means familiarizing these networking folks with them more and more. Even if Dell decides not to renew the Cumulus Partnership after EMC and VMware are fully ingested it means that the install base of Cumulus will be bigger than it would have been otherwise. When those devices are up for refresh the investigation into replacing them with Cumulus-branded equipment is one that could generate big wins for Cumulus.

Tom’s Take

Dell and EMC are going to touch every facet of IT when they collide. Between the two of them they compete in almost every aspect of storage, networking, and compute as well as many of the products that support those functions. Everyone is going to face rapid consolidation from other companies banding together to challenge the new 800-lb gorilla in the space.

Networking will see less impact from this merger but it will be important nonetheless. If nothing, it will drive Cisco to start acquiring at a faster rate to keep up. It will also allow existing startups to make a name for themselves. There’s even the possibility of existing networking folks leaving traditional roles and striking out on their own to found startups to explore new ideas. The possibilities are limitless.

The Dell/EMC domino is going to make IT interesting for the next few months. I can’t wait to see how the chips will fall for everyone.

HP Is Buying Aruba. Who’s Next?

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Sometimes all it takes is a little push. Bloomberg reported yesterday that HP is in talks to buy Aruba Networks for their wireless expertise. The deal is contingent upon some other things, and the article made sure to throw up disclaimers that it could still fall through before next week. But the people that I’ve talked to (who are not authorized to comment and wouldn’t know the official answer anyway) have all said this is a done deal. We’ll likely hear the final official confirmation on Monday afternoon, ahead of Aruba’s big Atmosphere (nee Airheads) conference.

R&D Through M&A

This is a shot in the arm for HP. Their Colubris-based AP lineup has been sorely lacking in current generation wireless technology, let alone next gen potential. The featured 802.11ac APs on their networking site are OEMed directly from Aruba. They’ve been hoping to play the OEM game for a while and see where the chips are going to fall. Buying Aruba gives them second place in the wireless market behind Cisco overnight. It also fixes the most glaring issue with Colubris – R&D. HP hasn’t really been developing their wireless portfolio. Some had even thought it was gone for good. This immediately puts them back in the conversation.

More importantly to HP, this acquisition cuts off many of their competitor’s wireless plans at the knees. Dell, Juniper, Brocade, Alcatel Lucent, and many others OEM from Aruba or have a deep partnership agreement. By wrapping up the entirety of Aruba’s business, HP has dealt a blow to the single-source vendors that are playing in the wireless market. And this is going to lead to some big changes relatively soon.

The Startup Buzz

Dell is perhaps the most impacted by this announcement. A very large portion of their wireless offerings were Aruba. They sold APs, controllers, and even ClearPass through their channels (with the names filed off, of course). Now, they are back to square one. How are they going to handle the most recent deals? What are their support options?

I little thought exercise with my friend Josh Williams (@JSW_EdTech) had a few possibilities:

  1. Dell forces HP to buyout all the support contracts for Dell/Aruba customers. That makes sense for Dell, but it will turn a lot of customers against them, especially when HP lets those customers know the reasons why.
  2. Dell agrees to release the developments they’ve done on the platform to HP in return for HP taking the support business. Quiet and clean. Which is why it likely won’t happen.
  3. Dell pays HP an exorbitant amount of money to take the support contracts. This gives HP the capital to take on all those new support contracts and gives Dell an exit to rebuild. This is probably what HP wants, but could end up sinking the deal.

Dell got burned, plain and simple. They likely could have purchased Aruba months ago and solidified the relationship. Instead, they are now looking for a new partner. However, I don’t think they are going to get burned again. Rather than shopping for a friend, they are going to be shopping for an acquisition. My money has always been on Aerohive. They have an existing relationship. The Aerohive controller-less cloud model fits Dell’s new strategies. And they would be a much cheaper pickup than Aruba. There is precedence for Dell skipping the big name and picking up a smaller company that’s a better fit. It’s a hard pill to swallow, but it gives Dell the chance to move forward with a lasting relationship.

Softwarely Defined

Brocade is a line-of-business partner of Aruba. They’ve only recently gotten involved since Motorola shut down their WLAN business. This is a good sign for them. That means they can exit from their position and not be significantly affected. It does leave them with a quandary of where to go.

The first choice would be to go back to the Motorola relationship, now in the form of Zebra Technologies. Zebra inherited quite a large portion of the WLAN space from Motorola, but they’ve been keeping rather quiet about it. Are they angling to be more of a support organization for existing installs? Or are they waiting for a big splash announcement to get back in the game? Partnering with Brocade would give them that announcement given the elevated profile Brocade has today.

Brocade’s other option would be to go down the SDN road. The plan for a while has been to embrace SDN, OpenFlow, and all things software defined. The natural target for this would be Meru Networks. Meru has been embracing SDN as well as of late. They had a nice event last year showcasing their advances in SDN. Brocade could bolster that SDN knowledge while obtaining a good wireless company that would give them the strength they need to augment their enterprise business.

Permission To Retire

The odd company out is Juniper. I’ve heard that they were involved at first in trying to acquire Aruba, but when you’re betting against HP’s pockets you will lose in the long run. Their other problem is Elliott Management, everyone’s new favorite “activist investor”.

Elliott has made no secret that they see the value in Juniper in the service provider market. As far back as last year, Elliott has been trying to get Juniper to reave off the ancillary businesses, including security, enterprise, and wireless. Juniper has officially ended sales for Trapeze-based products already. Why would Elliott let them buy another wireless company so soon after getting rid of the last one. Even as successful as Aruba is, Elliott would see it as another distraction. And when someone that active is calling the shots, you can’t go against them, lest you end up unemployed.

This is the end for Juniper’s wireless aspirations. That’s not a bad thing, necessarily. This gives them the impetus needed to focus on the service provider market. It also gives them a smaller enterprise switching portfolio to package up and sell off should that pound of flesh be necessary to sate Elliott as well. Time will tell.

Everyone Else

Any other companies with Aruba relationships are either dipping their toes in the wireless waters or don’t care enough to worry about the impact it will have. It will be an easy matter for companies like Alcatel-Lucent to go out and find a new OEM partner, likely with someone like Extreme Networks or Ruckus. Those companies are making great technology and will be happy to supply the APs that customers need. Showing off their technology will also give them great in-roads into customers that might not have been on their radar before.

Tom’s Take

It’s going to be an exciting time in the wireless space. HP’s acquisition is going to start the falling dominoes for other companies to buy into the wireless space as well. When the dust settles, there will be new number twos and number threes in the market. It also clears the middle of the space for up-and-comers to grow. Cisco is going to stay number one for a while, and HP will be number two when this deal closes. But until we see the fallout from who will be purchased and partnered with it’s tough to say who will be a clear winner. But make sure you’ve got your popcorn ready. Because this isn’t over yet. Not by a long shot.

 

Brave New (Dell) World

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Companies that don’t reinvent themselves from time to time find themselves consigned to the scrap heap of forgotten technology.  As anyone that worked at Wang.  Or Packard Bell.  Or Gateway.  But, not everyone can be like IBM.  It takes time and careful planning to pull of a radical change.  And last but not least, it takes a lot of money and people willing to ride out the storm.  That’s why Dell has garnered so much attention as of late with their move to go private.

I was invited to attend Dell World 2013 in Austin, TX by the good folks at Dell.  Not only did I get a chance to see the big keynote address and walk around their solutions area, but I participated in a Think Tank roundtable discussion with some of the best and brightest in the industry and got to take a tour of some of the Dell facilities just up the road in Round Rock, TX.  It was rather interesting to see some of the changes and realignments since Michael Dell took his company private with the help of Silver Lake Capital.

ESG Influencer Day

The day before Dell World officially kicked off was a day devoted to the influencers.  Sarah Vela (@SarahVatDell) and Michelle Richard (@Meesh_Says) hosted us as we toured Dell’s Executive Briefing Center.  We got to discuss some of Dell’s innovations, like the containerized data center concept.

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Dell can drop a small data center on your property with just a couple of months of notice.  Most of that is prepping the servers in the container.  There’s a high-speed video of the assembly of this particular unit that runs in the EBC.  It’s interesting to think that a vendor can provide a significant amount of processing power in a compact package that can be delivered almost anywhere on the planet with little notice.  This is probably as close as you’re going to get to the elasticity of Amazon in an on-premise package.  Not bad.

The Think Tank was another interesting outing.  After a couple of months of being a silent part of Tech Field Day, I finally had an opportunity to express some opinions about innovation.  I’ve written about it before, and also recently.  The most recent post was inspired in large part by things that were discussed in the Think Tank.  It believe that IT is capable of a staggering amount of innovation if they could just be given the chance to think about it.  That’s why DevOps and software defined methodologies have such great promise.  If I can use automation to take over a large part of my day-to-day work, I can use that extra time to create improvement.  Unloading the drudgery from the workday can create a lot of innovation.  Just look at Google’s Ten Percent Time idea.  Now what if that was 25%?  Or 50%?

Dell does a great job with their influencer engagements.  This was my second involvement with them and it’s been very good.  I felt like a valued part of the conversation and got to take a sneak peek at some of the major announcements the day before they came out.  I think Dell is going to have a much easier road in front of it by continuing to involve the community in events such as this.

What’s The Big Dell?

Okay, so you all know I’m not a huge fan of keynotes.  Usually, that means that I’m tweeting away in Full Snark Mode.  And that’s if I’m not opposed to things being said on stage.  In the case of Dell World, Michael Dell confirmed several ideas I had about the privatization of his company.  I’ve always held the idea that Dell was upset the shareholders were trying to tell him how to run his company.  He has a vision for what he wants to do and if you agree with that then you are welcome to come along for the ride.

The problem with going public is much the same as borrowing $20 from your friend.  It’s all well and good at first.  After a while, your buddy may be making comments about your spending habits as a way to encourage you to pay him back.  The longer that relationship goes, the more pointed the comments.  Now, imagine if that buddy was also your boss and had a direct impact on the number of hours your worked or the percentage of the commission you earned.  What if comments from him had a direct impact on the amount of money you earned?  That is the shareholder problem in a nutshell.  It’s nice to be flush with cash from an IPO.  It’s something else entirely when those same shareholder start making demands of you or start impacting your value because they disagree with your management style.  Ask Michael Dell how he feels about Carl Icahn?  I’m sure that one shareholder could provide a mountain of material.  And he wasn’t the only one that threatened to derail the buyout.  He was just the most vocal.

With the shareholders out of the way, Dell can proceed according to the visions of their CEO.  The only master he has to answer to now is Silver Lake Capital.  So long as Dell can provide good return on investment to them I don’t see any opposition to his ideas.  Another curious announcement was the Dell Strategic Innovation Venture Fund.  Dell has started a $300 million fund to explore new technologies and fund companies doing that work.  A more cynical person might think that Michael Dell is using he new-found freedom to offer an incentive to other startups to avoid the same kinds of issues he had – answering to single-minded masters only focused on dividends and stock price.  By offering to invest in a hot new startup, Michael Dell will hopefully spur innovation in areas like storage.  Just remember that venture capital funds need returns on their investments as well, so all that money will come with some strings attached.  I’m sure that Silver Lake has more to do with this than they’re letting on.  Time will tell if Dell’s new venture fund will pay off as handsomely as they hope.

Tom’s Take

Dell World was great.  It was smaller than VMWorld or Cisco Live.  But it fit the culture of the company putting on the show.  There weren’t any earth shattering announcements to come out of the event, but that fits the profile of a company finding its way in the world for the second time.  Dell is going to need to consolidate and coordinate business units to maximize effort and output.  That’s not a surprise.  The exuberance that Michael Dell showed on stage during the event is starting to flow down into the rest of Dell as well.  Unlike a regular startup in a loft office in San Francisco, Dell has a track record and enough stability to stick around for while.  I just hope that they don’t lose their identity in this brave new world.  Dell has always been an extension of Michael Dell.  Now it’s time to see how far that can go.

Disclaimer

I was an invited guest of Dell at Dell World 2013.  They paid for my travel and lodging at the event. I also received a fleece pullover, water bottle, travel coffee mug, and the best Smores I’ve ever had (really).  At no time did they ask for any consideration in the writing of this review, nor were they promised any.  The opinions and analysis presented herein reflect my own thoughts.  Any errors or omissions are not intentional.

Will Dell Buy Aerohive?

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DELL-Aerohive-Logo

One rumor I keep hearing about in the industry involves a certain buzzing wireless vendor and the world’s largest startup.  Acquisitions happen all the time.  Rumors of them are even more frequent.  But the more I thought about it, the more I realized this may be good for everyone.

Dell wants to own the stack from top to bottom.  In the past, they have had to partner with printer companies (Lexmark) and networking companies (Brocade and Juniper) to deliver parts of the infrastructure they couldn’t provide themselves.  In the case of printers, Dell found a way to build them on their own.  That reduced their reliance on Lexmark.  In the networking world, Dell shocked everyone by going outside their OEM relationship and buying Force10.  I’ve talked before about why the Force10 pickup was a better deal in the long run than Brocade.

Dell’s Desires

Dell needs specific pieces of the puzzle.  They don’t want to be encumbered with ancillary products that will need to be jettisoned later.  Buying Brocade would have required unwinding a huge fibre channel business.  In much the same way, I don’t think Dell will end up buying their current wireless OEM, Aruba Networks.  Aruba has decided to branch out past the doing simple wireless and moved into wired network switches and security and identity management programs like ClearPass.  Dell doesn’t want any of that.  They already have an issue integrating the Force10 networking expertise into the PowerConnect line.  I’ve been told in the past the FTOS will eventually come to PowerConnect, but that has yet to happen.  Integrating purchased companies isn’t easier.  That becomes exponentially harder the more product lines you have to integrate.

Aruba is too expensive for Dell to buy outright.  Michael Dell spent a huge chunk of his cash to get his company back from the shareholders.  He’s going to put it on a diet pretty soon.  I would expect to see a few product lines slimmed down or outright dropped.  That makes it tough to justify buying so much from another company.  Dell needs a scalpel, not a sledgehammer.

Aerohive’s Aspirations

Aerohive is the best target for Dell.  They are clearly fighting for third place in the wireless market behind Cisco and Aruba.  Aerohive has never been shy about punching above their weight.  They have the mentality of a scrappy terrier that won’t go down without a fight.  But, they are getting pressure to expand quickly across their product lines.  They took their time releasing an 802.11ac access point.  Their switching offering hasn’t caught on in the same way that of Aruba or Meraki (now a division of Cisco).

Aerohive is on the verge of going public.  I’m sure the infusion of cash would allow them to pay off some early investors as well as fund more development for 802.11ac Phase 2 gear and maybe a firewall offering.  The risk comes when you look at what happened to Ruckus Wireless shortly after their IPO.  While they did recover, it didn’t look very good for a company that supposedly did have a unique claim, their antenna design.  Aerohive is a cloud management platform like many others in the market.  You have to wonder how investors would view them.  Scrappy doesn’t sell stock.

Aerohive is now fighting in the new Gartner “Wired and Wireless Access” magic quadrant, which is an absolute disaster for everyone.  An analyst firm thinks that wireless is just like wired, so naturally it makes sense for AP vendors to start making switches, right?  Except the people who are really brilliant when it comes to wireless, like Matthew Gast and Victor Shtrom couldn’t care less about bits on copper.  They’ve spent the better part of their careers solving the RF problems in the world.  And now someone tells them that interference problems aren’t that much different than spanning tree?  I would have long since planted my head permanently onto my desk if I’d been told that in their position.

Aerohive gains a huge backer in the fight if Dell acquires them.  They get the name to go up against Cisco/Meraki.  The gain R&D from Dell with expertise around cloud management.  They can start developing integration with HiveManager and Dell’s SMB extensive product line.  Switch supply becomes a thing of the past.  Their entire software offering fits well with what Dell is trying to accomplish from a device independence perspective with regards to customers.

Tom’s Take

I don’t put much stock in random rumors.  But I’ve heard this one come up enough to make me ask some tough questions.  There are people in both camps that think it will happen sometime in 2014.  Dell has to get the books sorted out and figure out who’s in charge of buying things.  Aerohive has to see if there’s enough juice left in the market to IPO and not look foolish.  Maybe Dell needs to run the numbers and find out what it would take to cash out Aerohive’s investors and add the company to the growing Empire of Round Rock.  A little buzz for the World’s Largest Startup couldn’t hurt.

Dell Enterprise Forum and the VRTX of Change

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I was invited by Dell to be a part of their first ever Enterprise Forum.  You may remember this event from the past when it was known as Dell Storage Forum, but now that Dell has a bevy of enterprise-focused products in their portfolio a name change was in order.  The Enterprise Forum still had a fair amount of storage announcements.  There was also discussion about networking and even virtualization.  One thing seemed to be on the tip of everyone’s tongue from the moment it was unveiled on Tuesday morning.

VRTX

Say hello to Dell’s newest server platform – VRTX (pronounced “vertex”).  The VRTX is a shift away from the centralized server clusters that you may be used to seeing from companies like Cisco, HP, or IBM.  Dell has taken their popular m1000 blade units and pulled them into an enclosure that bears more than a passing resemblance to the servers I deployed five or six years ago.  The VRTX is capable of holding up to 4 blade servers in the chassis alongside either 12 3.5″ hard drives or 25 2.5″ drives, for a grand total of up to 48 TB of storage space.  What sets VRTX apart from other similar designs, like the IBM S-class BladeCenter of yore, is the ability for expansion.

Rather than just sliding a quad-port NIC into the mezzanine slot and calling it a day, Dell developed VRTX to expand to meet future needs of customers.  That’s why you’ll find 8 PCIe slots in VRTX (3 full height, 5 half height).  That’s the real magic in this system.  For example, the VRTX ships today with 8 1GbE ports for network connectivity.  While 10GbE is slated for a future release you could slide in a 10GbE PCIe card and attach it to a blade if needed to gain connectivity.  You could also put in a Serial Attached SCSI (SAS) Host Bus Adapter (HBA) and gain more expansion for your on-board storage.  In the future, you could even push that to 40GbE or maybe one of those super fast PCIe SSD cards from a company like Fusion-IO.  The key is that the PCIe slots give you a ton of expandability in such a small form factor instead of limiting you to whatever mezzanine card or expansion adapter has been blessed by the skunkworks labs for your supplying server vendor.

VRTX doesn’t come without a bit of controversy.  Dell has positioned this system as a remote office/branch office (ROBO) solution that combines everything you would need to turn up a new site into one shippable unit.  That follows along with comments made at a keynote talk on the third day about Dell believing that compute power has reached a point where it will no longer grow at the same rate.  Dell’s solution to the issue is to push more compute power to the edge instead of centralizing it in the data center.  What you lose in manageability you gain in power.

The funny thing for me was looking at VRTX and seeing the solution to a small scale data center problem I had for many years.  The schools I used to serve didn’t need an 8 or 10-slot blade chassis.  They didn’t need two Compellent SANs with data tiering and failover.  They needed a solution to virtualize their aging workloads onto a small box built for their existing power and cooling infrastructure.  VRTX fits the bill just fine.  It uses 110v power.  The maximum of four blades fits just perfectly with VMware‘s Essentials bundle for cheap virtualization with the capability to expand if needed later on.  Everything is the same as the enterprise-grade hardware that’s being used in other solutions, just in a more SMB-friendly box.  Plus, the entry level price target of $10,000 in a half-loaded configuration fits the budget conscious needs of a school or small office.

If there is one weakness in the first iteration of VRTX it comes from the software side of things.  VRTX doesn’t have any software beyond what you load on it.  It will run VMware, Citrix, Hyper-V, or any manner of server software you want to install.  There’s no software to manage the platform, though.  Without that, VRTX is a standalone system.  If you truly wanted to use it as a “pay as you grow” data center solution, you need to find a way to expand the capabilities of the system linearly as you expand the node count.  As a counterpoint to this, take a look at Nutanix.  Many storage people at Enterprise Forum were calling the VRTX the “Dell Nutanix” solution.  You can watch an overview of what Nutanix is doing from a session at Storage Field Day 2 last November:

The key difference is that Nutanix has a software management program that allows their nodes to scale out when a new node is added.  That is what Dell needs to work on developing to harness the power that VRTX represents.  Dell developed this as a ROBO solution yet no one I talked to saw it that way.  They saw this as a building block for a company starting their data center build out.  What’s needed is the glue to stitch two or more VRTX systems together.  Harnessing the power of multiple discrete compute units is a very important part of breaking through all the barriers discussed at the end of Enterprise Forum.

Tom’s Take

Bigger is better.  Except when it’s not.  Sometimes good things really do come in small packages.  Considering that Dell’s VRTX was a science project for the last four years being built as a proof-of-concept I’d say that Dell has finally achieved one thing they’ve been wanting to do for a while.  It’s hard to compete against HP and IBM due to their longevity and entrenchment in the blade server market.  Now, Dell has a smaller blade server that customers are clamoring to buy to fill needs that aren’t satisfied by bigger boxes.  The missing ingredient right now is a way to tie them all together.  If Dell can mulitplex their resources together they stand an excellent chance of unseating the long-standing titans of blade compute.  And that’s a change worth fighting for.

Disclaimer

I was invited to attend Dell Enterprise Forum at the behest of Dell.  They paid for my travel and lodging expenses while on site in San Jose.  They also provided a Social Media Influencer pass to the event.  At no time did they place any requirements on my attendance or participation in this event.  They did not request that any posts be made about the event.  They did not ask for nor where they granted any kind of consideration in the writing of this or any other Dell Enterprise Forum post.

Dell and the Home Gym

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DellFlex

Unless you’ve been living under a very cozy rock for the last couple of weeks, you’ve heard that Michael Dell jumped in and bought his company back with the help of Microsoft and Silver Lake Capital.  There’s more than a fair amount of buzz surrounding this leveraged buyout.  What is Michael planning on doing with his company?  Why did he suddenly want to take it private?  What stake does Microsoft play in all of this?  I think Michael Dell felt it was time to hit the home gym, so to speak.

There’s usually a large influx of people into health clubs and gymnasiums around the first of the year.  These people made a resolution to get fit and decided to go out to do it.  They probably wanted to get out of the house after being cooped up during the holidays.  Maybe they wanted to go somewhere with a treadmill or a weight bench.  Perhaps they felt the only way that they could get fit was by being around other people that motivated them to get things done.  They all have their reasons.  There does exist a subset of the population that doesn’t go to the gym for various reasons.  In this case, I’m focusing on those that don’t like having the spotlight shined on them.  They either are afraid that they’ll look foolish in public just starting out with a workout program or they’re scared that others will judge them for their form or exercise choices.  They’d rather apply the work using a personalized workout program or spend the money to buy some of the equipment and setup their own gym in their garage.  They may work twice as hard in the comfort and protection of their own home to get fit.  These are the kinds of people that you don’t see for six or seven months only to run into them one day and say “Wow!  Look at you!”

To extend this metaphor to the market, Dell is in need of shaping up.  Whether they’ve acquired too many companies or their margins are getting slammed by the shift away from PCs, the fact is that Michael Dell has decided to make some changes.  However, he doesn’t want that to happen in the public health club, or stock market in this case.  Every action will be scrutinized.  Every decision will be debated by investors and talking heads on CNBC and CNN.  They will deride Dell for strategy mistakes and wonder why they made the decisions they did.  Doubt and uncertainty of direction will squeeze the life from Michael Dell’s baby.  If you don’t believe something like that could happen, why don’t you ask Meg Whitman what she thinks about the market right now?

Dell has decided to buy some home gym equipment and get fit in the privacy and comfort of their own home.  This isn’t a cheap solution by any stretch of the imagination.  Michael Dell put up a lot of his own money.  He’s borrowed from others and put his reputation and livelyhood on the line.  He’s done this because he feels that he knows how to get fit.  He doesn’t need the gym rats sitting around critiquing his form and telling him he needs to do more squats.  He wants to take the time to concentrate on the “exercises” he feels are most important in order to come out looking like he wants.  Maybe that involves staff reductions or spin offs.  At this point, no one really knows.  What can be certain is that no one will know until Dell wants them to know.  No investor speculation or outside interference will drive Michael Dell to do something he doesn’t want to do.  Better still, those same dynamics won’t have an opportunity to force him out like the CEO of Chesapeake Energy or the last two CEOs of HP.  He’s only going to quit this new fitness regimen when he decides he’s done.  As for the Microsoft question?  They basically provided a treadmill for Dell’s home gym with their investment.  That way, no matter what else Michael Dell decides to work out with, Microsoft is sure he’ll be running on their treadmill for his workouts.

You can’t help but applaud Michael Dell for wanting to fix things.  He’s certainly started a firestorm among his current investors, but I think he genuinely believes he can right the ship here.  Granted, he’s known as a very private person.  That means he doesn’t want to air his business in public if he can help it.  That, to me, is the driving motivation behind the buyout.  He wants to fix things privately and come back out on the other side a stronger, better company.  He wants people to say “Wow!” when he’s finished and compliment him on his new physique.  Once he’s put in all the hard work, I can assure you that you’ll see more of Dell’s new look in public.