Thoughts on Dell’s position in Enterprise IT world

I like to learn about business strategies, particularly in the technology world. This post is just to put into words my understanding of Dell’s position in the Enterprise IT sphere. While I spent a lot of my free time on reading to navigate through as much as possible the abstraction and complexity of the IT world, I can’t understand the products/services as well as I do with, let’s say, a streaming service like Netflix. With luck, I may get some constructive feedback on what I might be incorrect about or what I have here is useful to someone out there.

IT is no longer a cost center to companies. It is where companies gain competitive advantages as the world goes digital. There are several notable trends:

  • While public clouds such as Azure or AWS offer flexibility, geographical reach, functionalities, quick time-to-market and cost-effectiveness, private clouds provide more control and better security. Companies need both. Hence, hybrid cloud is where enterprises are headed. Multi-cloud is a flavor of hybrid cloud in that a firm may use different public clouds. Whether hybrid or multi-cloud model works for one firm depends on the business requirements and resources available to that firm
  • As enterprises have IT footprint on both the cloud and on-prem, it becomes a challenge to manage the whole network. It’s critical to know which data travels to where and whether data is safe. The challenge compounds when the need for productivity forces companies to use 3rd party cloud applications such as ServiceNow, Box and Google Drive, just to name a few. As a result, the management a, automation and security of, as well as visibility into the network are instrumental to a successful hybrid/multi cloud.
  • A lot of companies have operations in different locations. Banks have branches. Retailers have stores. These branches are important touch points through which customers expect to have great experience and services. And these branches need to talk to data centers or cloud application providers. The network that links branches, data centers and the cloud must be secure, efficient, manageable and cost-effective.
  • Brands must release applications fast and often to continuously bring values to customers. From a user perspective, that’s why we often have to update our mobile applications, but there is a lot more that goes behind the scenes for brands to bring new updates to life. In order to have fast and continuous software releases, companies need to set up the necessary infrastructure that allows developers to do their job quickly and efficiently. Hence, software-defined data center (SDDC) and Kubernetes have become increasingly popular. With SDDC, data centers can be set up and later scale quickly as new technological advances increasingly relieve engineers of time-consuming manual workload. With regard to software development, micro-services is the de facto approach in which Kubernetes is a major component. Developers either want to build new software from scratch using Kubernetes or re-package existing applications on a Kubernetes-based platform
Google Trends Graph on Kubernetes

Dell itself

In short, Dell offers services and products that help companies build and scale data centers such as backup, disaster recover, file systems, storage, SDDC solutions such as VxRack. As the majority shareholder of VMWare, Dell integrates a lot of VMWare products in some of its own. The integration is critical to seamless connection between on-prem infrastructure and data on public clouds. For instance, if a firm builds its data center on VxRack, Dell’s SDDC turnkey product, and deploys some workloads on AWS using VMWare on AWS, the data and applications on-prem and on AWS can be set up quickly to talk to each other. Plus, the firm can manage all workloads using the same VMWare interface.

VMWare

Essentially, VMWare has built itself to be the one ingredient that companies wishing to adopt hybrid cloud need. It has built partnerships with AWS, GCP and IBM as collaboration with Azure is reportedly in the work. On top of that, through its offerings such as vSAN (storage), vSphere (compute), NSX (network), VeloCloud (SD-WAN) and a host of services designed for analytics, management and security such as Workspace One, Wavefront, AppDefense or vRealize, it is the glue that connects 3rd party applications, public clouds, private clouds (data centers) and branches.

Through its acquisition of EMC, Dell is the majority shareholder of VMWare.

Pivotal

Pivotal is Dell’s answer to the world’s current obsession with micro-services and Kubernetes. Pivotal offers services that help companies build applications better, faster and more efficiently. Developers want automation to relieve them of infrastructure-managing tasks so that they can focus on developing code, but they don’t want to lose too much freedom in development. Through its portfolio, Pivotal strives to meet those needs. Heptio is their latest acquisition and provides managed Kubernetes services. With Heptio, developers are not subject to the limitations imposed by PAS, but at the exchange of limited automation. With PAS, there is a lot of automation, but developers may not appreciate the rules that come with a higher level of automation. PKS is supposed to bring a balanced mix and the best of both worlds. I wrote a bit about PaaS vs CaaS here

As in the case of VMWare, Dell owns Pivotal by virtue of its EMC acquisition.

Security

Dell has its own security subsidiary in SecureWorks, a $1.8 billion company as of this writing. In addition, VMWare has its own security solutions that are designed to improve security as NSX with micro-segmentation or AppDefense.

Conclusion

The more I read about Dell and its subsidiaries, the more I am impressed by its strategy and growth through innovation and M&A (EMC, VeloCloud, NSX…). Based on my understanding of where Dell stands in the Enterprise IT world, it seems to have the necessary pieces to take advantage of the IT trends mentioned above.

Thought on VMWare Strategy

I want to share my thought on VMWare’s strategy on hybrid/multi cloud. Disclaimer: I owned a tiny number of VMWare and Dell Technologies stocks personally. As a student, the investment is just the skin I put in the game. I am doing this to share my opinion and see different opinions that you may have.

Software-defined data center

Let’s think about your phone for a second. Your phone, no matter how powerful or new it is, is limited in its storage. After taking enough pictures or videos, the phone cannot store any more data. You either buy a new phone with bigger storage or move the existing data somewhere, either to a hard drive, a desktop or the cloud (like iCloud in the case of iPhones).

The example shows the limitation of being coupled with hardware. Now, think about that from a corporate perspective. When a company accumulates enough data, its infrastructure will need to be upgraded and expanded. Ordinarily, new hardware has to be bought, in addition to the purchase of software licenses. However, the process of buying hardware is time-consuming and can be costly. On top of that, there will be effort spent on configuration, maintenance, patching and updates. All these mundane tasks take away attention of IT staff from developing applications and innovation. To move with speed in this age of data, corporations need to automate and rely less on hardware. Everything needs to be software-based.

Enter Software-defined data center (SDDC).

Software-defined data center is a growing trend in the technology. Simply put, it refers to  an architecture in which compute, storage and network are virtualized and delivered as a service. This video from VMWare does a good job on explaining the term.

Some of the benefits of SDDC include automation, quick provisions of resources, switch from capital expenditure to operational expenses and scalability.

Focus on hybrid & multi-cloud

For the cloud &SDDC to work, virtualization is indispensable and VMWare has been the leader in virtualization. Now that everything in a data center such as compute, storage or network is virtualized in SDDC trend, VMWare is in a perfect position to grow and dominate the market.

Each cloud provider has its own unique offerings and is suited for a particular set of workloads. There is no one-cloud-fits-all. Hence, the best cloud strategy for a corporation is to have a hybrid or multi cloud architecture, taking advantage of each cloud’s strengths. The diversity in cloud platforms may help with the workloads, but put pressure on the task of cost and operational management. It’s not easy to manage multiple platforms, especially when some of them offer complex pricing and services. Imagine that you are a purchasing manager taking care of many vendors. The diversity of vendors brings the best product/service in each category to the fold, but it also brings the headache of vendor management. The same goes with hybrid cloud and multi-cloud strategy.

Plus, security is a big issue nowadays. The hybrid/multi cloud structure requires even more focus on security than usual.

3-Set Venn Diagram-9

VMWare practically pioneered the virtualization of x86 servers. It had some success with the private cloud, but not so with the public cloud area. Realizing that it would be an uphill battle to compete with the likes of AWS, Azure or GCP, VMWare sold its vCloud (its version of public cloud) to OVH.

How has VMWare been doing? Here is a diagram that took into account their M&A and announcements in the past two years that I think are related to the hybrid/multi cloud trend

Blank Diagram (2)

By partnering with big public cloud vendors and divesting its own public offering, VMWare killed two birds with one stone. It avoided a head-on competition whose result was already predictable for VMWare. By partnering with AWS or IBM, VMWare could leverage their global footprint to sell their software. If corporations already used and loved vSphere and vSAN, why not making it easy for them to use such software on public cloud?

To make its new strategy more sticky to customers, VMWare, as the diagram shows, invests heavily into cloud management and security. I believe that it’s going to continue in the future. At VMWorld 2018, the company announced their initiative in IoT and blockchain, as well as their partnership with AWS on database. Regarding the new initiatives on IoT and blockchain, it makes sense to me. That’s where the industry is heading towards. If the foundation infrastructure is already there, the logical move is to offer companies with the tools and software to build blockchain & IoT applications to solve their business issues.

VMWare is not strong in database. Why not working with AWS’ Relational Database Service to complete the full stack?

All in all, I love what VMWare is doing strategically in terms of hybrid & multi cloud. I agree with what VMWare’s CEO said in the earnings call: “We believe no other enterprise software company is as well positioned as VMware. Customers are increasingly turning to VMware to partner with them to accelerate their digital journeys. Our interoperable cloud mobility, networking and security solutions form a powerful digital foundation for delivering the apps that drive business innovation and business success.”