Dell Spins off $64 Billion VMware as it Battles Debt Hangover (arstechnica.com) 29
PC pioneer Michael Dell is set to cap his climb back to the top of the computing world on Monday with one of the largest corporate spin-offs. Dell Technologies will shed its 81 percent stake in publicly traded VMware, creating an independent software company with a stock market value of nearly $64 billion. Dell's remaining hardware operations have an implied value of $33 billion, based on its latest share price. From a report: The transaction, first disclosed in April, completes an eight-year saga in which the Texan entrepreneur turned his $3.8 billion interest in an out-of-favor PC maker into a personal stake in a broader data center hardware and software empire worth $40 billion. Beginning with the buyout of his PC company, Dell went on to devour server and storage company EMC for $67 billion before taking the group public again in 2018. Along the way, he fought heated battles with dissident shareholders over claims that he bought Dell on the cheap and used complex financial engineering in the EMC deal to short-change investors. Silver Lake, the Silicon Valley private equity group that helped mastermind the dealmaking, will be left with stakes in Dell and VMware worth $11 billion.
I always wondered ... (Score:4, Informative)
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There was a sales synergy... Buy one big Dell Server, then make it do a lot of things with VMWare
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And then Microsoft (Score:2)
Put Hyper-V on its servers OSes
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Not quite in that period the biggest challenge with virtualization was - storage and the biggest sales driver for storage area network kit was virtualization. The synergy was VMWare + EMC
Perhaps they should (Score:2)
give the money back to shareholders and go out of business? --Micheal Del.
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... why Dell took that investment in VMWare. it did not seem like a good fit with Dell's other businesses.
VMware came as an apendage of the real target. EMC
Re:I always wondered ... (Score:5, Informative)
Easy, Dell didn't like their business model.
All the big x86 server vendors hate being x86 server vendors, and want to be services and software. IBM kicked the hardware part of the business out entirely, HPE kicked out those desktop class devices to focus on not so much the servers themselves, but using server sales to drive people into services, software, and moving customers to leasing models rather than purchasing. Dell had no software leverage to speak of, so just as IBM bought RedHat, Dell bought VMware. Investors hate the reality of low margin so they are driven to chase high margin, even if they don't actually have a good path to acheiving those magically higher margins.
Of course, the problem for Dell is that they tried to keep both and tried to awkwardly bolt them together, despite there being no particular natural 'stickiness' between vmware and dell hardware. Further, vmware has had problems trying to grow vertically up thte stack, since their whole business was making it more flexible to let the users get to Linux or Windows to actually get their work done. Now both platforms have grown competent virtualization and further the automation of workload has shifted more towards containers and vmware is looking more and more like an awkward player that takes money to deliver increasingly redundant function with what the customers already have to buy anyway. Additionally, vmware doesn't have any big cloud providers based on their technology, so while their competitors can deliver interesting tie-ins with popular cloud platforms, that isn't really in the cards for vmware.
Re:I always wondered ... (Score:5, Interesting)
I think VMware was just independent enough to prevent Dell or EMC from rigging the game and baking in special support for unique hardware features, but its not like they didn't try with VxRail.
But VMware has made enough mistakes on its own over time. They had a licensing prohibition on reselling virtualization services using their software, I always wondered what it would look like now if they hadn't done that.
I also think that they didn't really plan well for their success, as in "What happens when everyone who wants VMware already has it?" because clearly they had been hurtling to a point where the market was saturated with their product and organic growth (ie, its customers own business growth) would never be much value, especially as servers grew in capacity/power and you didn't need to increase your host node count.
The answer seemed to be "buy a bunch of ancillary software" but it was hella expensive and little value to all but the largest deployments.
And then they went all-in on vSAN, which is good in some ways, but cramming shit back into the hypervisor has not worked well and v7 is an absolute train wreck of bugs.
I kind of predict in 10 years they might not be in business anymore, at least as a standalone company. They have a partnership now with AWS, maybe AWS will just buy them outright as a means of bridging VMware to AWS adoption.
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He didn't acquire VMware directly.
EMC bought VMware in 2003. When Dell merged with EMC a decade later, it was already part of the package.
The EMC-VMware acquisition probably sped up some useful things in terms of array acceleration---where certain laborious tasks like deduplication, copying, and consolidation can be offloaded to the storage controllers. That paid off, technollogically speaking.
Dell tried to sell pre-built hyperconverged servers. This cannibalized their storage business when it worked, and i
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I can never remember the right timeline, but I seem to remember it was EMC who controlled VMware, and Dell's ownership came with their takeover of VMware.
I think the synergy was always there for Dell -- they sell switching, servers and storage, all relevant to VMware. And probably seen as some kind of hedge to the kinds of shrinking product sales driven by VMware adoption, since they could count on VMware revenue to offset loss of server revenue.
IMHO the real problem is that I think VMware was overly influ
Michael Dell is good, but he's Level 4 (Score:3)
The problem with how M. Dell runs things is that the company can't stand on it's own and grow without M. Dell at the helm. He needs to start cultivating good leaders within Dell that can take over the divisions or even the top spot so that Dell Computers works as a standalone entity.
Debt explains a lot. (Score:3)
Since the recent laptops from Dell have had a quite crappy feeling. Features that are useless, the USB-C charging port overly sensitive and the USB-C dock is plain dumb.
The older Dell laptops were boring but more reliable - like a Volvo 240. The new are like a random French car. Why is there a touch screen on a laptop?
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Why is there a touch screen on a laptop?
The more pappropos question is "why are you buying a laptop with a touch screen?"
As far as I know, there are more non-touchscreen dell laptops than dell touchscreen ones. It seems that some people like touchscreens, and dell gives them the choice, while people like you who do not like touchscreens, also have a choice.
And choice is good.
A bad thing would be a company forcing you (who do not like touchscreens) to have laptops with touchscreens ONLY, or forcing other people (who like touchscreens) to have lapt
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Well, I didn't buy it, it was the IT department at work that did.
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This is a problem with allowing directors to make hardware standard choices. Dell's XPS lineup is particularly bad in that it delivers poorly on all the luxury features these people think they need without making any of them working or usable.
I'm spinning off (Score:3)
I'm creating a few alternative people to hold my mortgage debts and credit cards. I get to keep the cash and equity in my house.
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Isn't that what kids are?
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Sadly a parent has legal responsibility for a minor for at least 18 years. Imagine if it took that long for a corporation to divest themselves of toxic assets.
Real Question (Score:3)
The real question is, what value does Dell have as a company without considering the value of VMWare?
How about them apples? (Score:2)
would you say Dell is beleaguered?
Smart Move on Dell's Part - VMware is dying. (Score:5, Insightful)
On an intel desktop, you have several high quality FREE options for a hypervisor, and if you are on a M1 Mac, parallels and opensource is your only option. Vmware is vaporware on that platform.
If you have an existing datacenter with VMware, you are getting screwed with license fees, so you have either moved workloads to a cloud somewhere, or are considering an alternative hypervisor, or moving applications to other technologies like Kubernettes. VMware has encouraged this by their very aggressive HCL updates with ver 7.0.
New companies/datacenter updates are usually building the data centers in a cloud, or are looking at anything but Vsphere due to its costs.
Small organizations and new companies simply can not afford VSphere and its hardware requirements. Successful small companies grow into big companies and become locked in datacenter technologies. VMWare has forgotten this. VMware has also forgot that systems admins love to experiment. Forcing them to either pay $200. a year to run the software on current hardware, or forcing them to consider piracy, is a bad idea.
Finally opensource hypervisors and management systems have really matured in recent years. Look at xcp-ng + Xen Orchestra ( paid or compiled free version) or KVM for examples. In the Microsoft world, hyperV is also attractive for small companies to start with.
I know from experience, it is trivial to migrate from vSphere to xcp-ng with XOA. For many organizations this is all that they need.
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Unfortunately the free hypervisor market is as much of a train wreck of open source spaghetti as the free Linux GUI market.
It's business suicide to adopt anything not as streamlined as VMware is for business use. I spend much of my professional life unfucking small businesses who had some open source genius implement open source "solutions" in their environment. Bonus points for making it work, but it creates a situation with so many problems relating to documentation (it NEVER exists, when it does its NE