VMware: Commercial Agreement with Dell






by Analytics Insight
January 23, 2022

VMware

Dell and VMware Special Committee of Independent Directors agree on terms that include significant simplification of corporate ownership structure

Challenges

Here are the top 5 performance management challenges in VMware environments:

  • Slow and complex problem diagnosis – 49%
  • Lack of visibility in the virtualized environment – ​​45%
  • Proactive troubleshooting – 43%
  • User experience issues – 38%
  • Chase of problems originating in other IT domains – 27%

The biggest problem is the inability to quickly and easily diagnose performance issues. The most difficult performance issues seem to be the ones where users call and complain that “my application is slow”.

Initiatives

VMware literally runs on VMware products, apps and solutions, and the company is honored to share our achievements and innovative initiatives. VMware IT works with all parts of the business, including R&D to deploy VMware products in the environments and with Sales to share our product implementation journey with customers. They have been instrumental in improving collaboration across the company and introducing infrastructure programs to complement app modernization. Dell and the VMware Special Committee of Independent Directors agree on terms that include a significant simplification of the company’s ownership structure, plus a special cash dividend of $11.5 billion to $12 billion immediately prior to spin-off, subject to closing conditions . Dell shareholders will receive an equal distribution of the VMware shares held by Dell Technologies, and CEO Michael Dell and Silver Lake Partners will own direct interests in VMware.

The two companies have also entered into a commercial agreement. VMware plans to advance in the software and SaaS market, through clouds and hardware infrastructure. Dell’s independence allows VMware to take strategic steps to achieve this goal. VMware will continue to work with Dell, but being independent offers more flexibility and “more openness to partnerships”. He declined to provide details of opportunities outside of Dell, which remains a major shareholder. Some analysts don’t see much impact on either company as both could continue to work together on the same core products they had before the split. The move is not expected to dampen the future of either company. But an unknown element is Gelsinger’s departure and whether his successor can keep the company going. VMware’s market value is at an all-time high right now, but whether it stays there depends on how solid leadership will come in after Pat [Gelsinger]said Geoff Woollacott, senior strategy consultant and principal analyst at Technology Business Research.

Given the growing adoption of open source in the tech industry, Dell might find it easy to forge relationships with VMware competitors that have been more aggressive in embracing open source, Woollacott said. “VMware has legacy subscription software that has always competed with open source alternatives,” Woollacott said. “But the open source, mainly in the form of Kubernetes, is becoming the big equalizer and the markets are moving more and more in that direction.” VMware has made some investments in open source in the recent past, similar to other software companies that have portfolios full of proprietary offerings. “VMware has a lot of proprietary software and most of the money is made from that software,” Chen says. “Microsoft was the same way, but look how they’ve moved to Linux and open source [both Microsoft and VMware], it will be a matter of balancing where proprietary software works best and where and how open source software works best.”

Result

VMware streamlines the journey for organizations to become digital companies that provide better experiences for their customers and empower employees to do their best work. Their software includes app modernization, cloud, networking and security, and digital workspace. Between now and 2030, the company aims to measure and report its environmental, social and governance (ESG) impact and strive to make progress towards its 30×30 goals. It recognizes that it cannot do this alone, nor all at once. The company will invest in co-innovation and collaboration with its vast ecosystem of customers and partners and together redefine what it means to be a force for good.

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Analytics Insight


Analytics Insight is an influential platform dedicated to insights, trends and opinions from the world of data-driven technologies. It tracks developments, recognition and performance of companies in the fields of artificial intelligence, big data and analytics around the world.

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