Dell (NASDAQ:DELL) has killed its OpenStack and VMware (NYSE:VMW) public cloud strategy and will instead focus on private clouds for customers. The move comes as Dell marches toward a potential company sale, and competition in the public cloud market — between Amazon Web Services, Google, Microsoft Windows Azure, Rackspace and now VMware vCloud Hybrid Service — continues to intensify.

Ironically, some of Dell’s own channel partners could be winners amid the PC giant’s decision to exit the public cloud market. Indeed, Dell will now drive customers to partners’ public clouds — including Joyent, ScaleMatrix and ZeroLag, according to The VAR Guy’s sister site, Talkin’ Cloud. 

Meanwhile, Network World has been ahead of the curve on this story — emerging as one of the first media sites to report Dell’s decision to abandon a public cloud build-out.

For Dell’s smaller VARs and MSPs, it’s now decision time. Some of those channel partners were likely weighing a move toward Dell’s public cloud. Now, those smaller channel partners will need to weigh were to host customers’ public cloud workloads.

Among the options:

The bottom line: Most channel partners can’t afford to build their own public clouds. Even if they could build such clouds, differentiating the services would prove difficult. Apparently, Dell has come to a similar conclusion.