While there may be a lot of cross-sell opportunities for hardware and software between Dell and VMware, Dell has a substantial list of data center software capabilities of its own, which it has accumulated over the years primarily through acquisition. This portfolio overlaps to a great extent with that of VMware, the data center software giant and EMC subsidiary Dell will gain control of if its $67 billion EMC acquisition successfully comes to a close.
In 2010, Dell bought Boomi, an expert in integration between cloud services and on-premise systems. The same year, it acquired Scalent, a management platform for virtualized data center environments. Quest Software, acquired by Dell in 2012, provides IT management software. Also in 2012, acquisition of Gale Technologies gave Dell advanced infrastructure-automation software for on-prem and hybrid clouds.
If VMware remains part of EMC and Dell, Dell will have the opportunity to become even more of a one-stop shop for a variety of data center and cloud management tools, Thomas Bittman, distinguished analyst at Gartner who covers VMware, said in an interview.
Dell has been pursuing the one-stop-shop status since at least last year, when it launched into public beta the Dell Cloud Marketplace, a platform for single-pane-of-glass shopping, purchasing, and management of public cloud services, starting with Amazon Web Services, Google Cloud Platform, and Joyent. VMware’s vCloud Air could potentially become the next cloud service available through the marketplace.
Dell’s cloud strategy has so far focused on small and mid-size customers. Adding VMware to the mix could give it a substantial play in the large enterprise market, Bittman said. But, “everything at this point is just speculation,” he added. “We really don’t know.”
“The question is whether EMC and Dell will maintain the company as it is, or whether they might sell parts of it,” Bittman said.
Presumably because of the uncertainty about VMware’s future, news of the deal sent its share value tumbling down.
VMware’s stock hasn’t done particularly well this year overall, starting the year around $80 per share, getting close to $90 mid-year, but sliding down continuously since. VMware was trading at about $80 per share just last week but dropped to just below $70 per share Tuesday afternoon, a drop attributed to the acquisition news.
Citing competitive pressure from Amazon Web Services, a JMP Securities analyst downgraded VMware’s stock from “market outperform” to “market perform” Tuesday, according to MarketWatch. Pacific Crest Securities lowered its 12-month stock target for VMware, citing near-term financial challenges for the company.
The MarketWatch report cited Morgan Stanley saying the proposed deal can potentially influence VMware stock “for some time.”