Today the news of Dell’s foray into private ownership took an interesting turn. Seems that Microsoft is considering an equity stake in Dell and I’m cautiously optimistic about it.
There’s a lot of buzz around this but most of it focuses on Microsoft’s interest in driving notebooks, tablets, and potentially phones through Dell. I agree there’s opportunity on the client side. But I think there’s genuinely more long-term potential for Dell and Microsoft to drive a common enterprise strategy to customers.
Microsoft’s Windows Server 2012, along with System Center 2012 R1, arguably provides the best value for traditional, private data centers who want to shift their IT toward a fully integrated, fully virtualized cloud infrastructure.
At least, according to their marketing, that’s what Microsoft would have you believe. The latest slogans include:
“Get cloud-grade capabilities in your datacenter.”
“Insert innovation here.”
“Transform the Datacenter.”
Microsoft is marketing itself as the true, value optimized innovator for cloud computing. And there’s some proof behind the claims. Others have a head start, particularly VMware, but Microsoft has massive force and potential for disruption — backed by solid software.
And believe it or not, Dell has cloud expertise, unique cloud capabilities (largely through acquisitions), and credibility in many places as a comprehensive cloud infrastructure vendor. But right now Dell’s cloud computing strategy seems to be “throw it against the wall and sell what sticks.” They’ve made money over the years from various cloud partnerships and initiatives, working with VMware, Oracle, Citrix, OpenCloud, and others. As they put it, they’re “hypervisor agnostic” — in other words, they find value in many partnerships.
I have no visibility to Dell cloud revenues or customer mix, but my guess is that most of the business comes via the VMware partnership. Would a Microsoft equity stake wreck the VMware partnership? Hard to say, but the potential seems to be there. VMware is the market leader, after all, and might frown at a Dell partially owned by Microsoft.
Rhetorical question time. What would happen if…
An equity stake changed Dell cloud strategy to favor Microsoft?
Dell and Microsoft started working on cloud much more closely?
Dell became the provider of choice for Microsoft cloud capabilities?
Dell built hardware, software, and services that are very tightly optimized for Microsoft?
Dell and Microsoft, with a firm foothold on tens of thousands of corporate data centers, were able to make a stronger case for end-to-end Dell & Microsoft that spanned client to cloud?
Time may tell. Comments are welcome.
* Disclosure: I worked for Dell for ten years and have had consulting projects with Dell.