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What do Cisco Systems CEO John Chambers, EMC CEO Joe Tucci and VMware CEO Pat Gelsinger have in common? All three executives appear set to participate in a VCE Converged Infrastructure launch event on Feb. 21.
The VAR Guy
February 7, 2013
3 Min Read
vce
What do Cisco Systems CEO John Chambers, EMC CEO Joe Tucci and VMware CEO Pat Gelsinger have in common? All three executives appear set to participate in a VCE Converged Infrastructure launch event on Feb. 21. The event’s timing and high-profile speaker list suggests Cisco (NASDAQ: CSCO), EMC (NYSE: EMC) and VMware (NYSE: VMW) remain closely aligned. But if that’s the case, why are there persistant rumors that VCE will ultimately crumble once software defined networking and software defined datacenters take hold? Hmmm…First, the facts: Cisco and EMC launched the VCE joint venture in 2010. VMware and Intel have made additional investments. The result is Vblock Systems for converged data centers. As of October 27, 2012, Cisco’s cumulative gross investment in VCE was approximately $397 million, inclusive of accrued interest, and its ownership percentage was approximately 35%, according to a Nov. 2012 SEC filing. Cisco expects to make additional VCE investments over the next 12 months, the same SEC filing indicated. Quick math suggests total multi-vendor funding into VCE is now above $1 billion.
So what’s the upside? Based on revenues, VCE had 57.4% market share among a group of leading vendors of integrated infrastructure systems, Gartner estimates. Also, 10 of the world’s top 15 telecommunications companies use VCE Vblock Systems, VCE asserts. Plus, Cloud Pro alleges that VCE is now gunning for “billion dollar cloud growth.”
Sounds great. So what’s the problem? Here’s the shortlist:
Network, storage and server vendors are betting on the next wave of virtualization — call it software-defined datacenters or software-defined networks. Either way, the game may be about to change. And that means Cisco’s alignment with EMC-VMware could become strained.
Cisco has invested in Parallels (cloud automation), Piston Cloud (promoter of OpenStack for private clouds) and Insieme, three moves that could compete with VMware.
VMware acquired Nicira, an SDN specialist, last year. The move rocked the industry. Cisco channel executives began speed dialing partners for their reactions the moment the VMware-Nicira deal was announced, The VAR Guy has heard.
VMware is betting its 2013 strategy on software-defined datacenters. In some cases, that means potential competition with Cisco.
Cisco has been strengthening its relationship with NetApp. Indeed, Network World alleges the Cisco-NetApp relationship will pull Cisco away from VCE. The VAR Guy doesn’t quite agree but it certainly made for a dramatic headline.
Wow. Amid all that drama you’d think the VCE alliance is set to collapse. But VCE CEO Praveen Akkiraju continued to express confidence in a recent ComputerWorld interview.
So what should channel partners believe? Decide for yourself during the Feb. 21 event featuring the CEOs of Cisco, EMC and VMware. But keep an eye on software-defined networking and software-defined datacenters. Cisco, EMC and VMware seem obsessed with the topic. And that doesn’t necessarily mean their views will remain in alignment…
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