As rumoured, VCE, the three-way love child of VMware, Cisco and EMC, is to be absorbed into the EMC Federation this quarter.
VCE builds and sells converged Vblock systems based on VMware’s virtualisation software, Cisco servers and networking and EMC storage. It is a startup and was jointly funded (until now) by Cisco and EMC. It has passed a $2bn/year run rate with its quarterly results and has 50 per cent plus year-on-year quarterly growth.
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Gartner and other analysts firms say it is the leader in converged systems supply.
Within EMC, VCE will remain intact with its own mission, operating charter and organisational structure, and says it will continue to build Vblocks with “best-of-breed technologies exclusively from Cisco, EMC, and VMware.” There are renewed multi-year engineering, resell and support agreements from the three.
Cisco and VMware will continue as strategic partners and investors, with Cisco retaining an approximately 10 per cent equity interest in VCE. There is no change in VCE exec ranks: Praveen Akkiraju remains as CEO and Frank Hauck as president, for example.
VCE will be recapitalised by the end of the year, with EMC having a controlling interest. In effect the EMC Federation becomes a quintet, formed from EMC II, Pivotal, RSA, VCE and VMware. Far from Elliott Management’s desire of a fractured and splintered federation, we have a strengthened one.
EMC chairman and CEO Joe Tucci issued a triumphal canned statement, including this nugget: “Our commitment to increased investment will enable VCE to significantly expand the scale and scope of its solutions, helping customers take better advantage of hybrid cloud and next-generation IT opportunities. We would like to welcome Praveen, VCE President Frank Hauck and the VCE team to EMC and congratulate them on the tremendous success of VCE.”
Why is Cisco ceasing its funding of VCE? The big C, Cisco chairman and CEO John Chambers, had a canned quote which said: “We have been thrilled with the execution, results and customer demand the VCE team has delivered. I look forward to the next chapter of VCE’s evolution and Cisco’s continued commitment in VCE as a crucial route to market for Cisco’s next-generation technologies for the data centre and cloud.”
It doesn’t say why Cisco wants to stop investing in VCE. The three VCE backers said: ”Cisco, EMC, and VCE jointly determined that this new structure would serve as the optimal model for VCE’s next phase of expansion, innovation, and long-term growth. “
Terrific. It seems blindingly obvious that increased competition between Cisco and VMware (re: software-defined networking) and Cisco and EMC (re: all-flash array storage and minor Supermicro server use by EMC) have played a part. But there is no immediate indication in changes of Vblock make up, or is there?
We’re told Vblocks will carry on using “best-of-breed technologies exclusively from Cisco, EMC, and VMware.”
An FAQ is unequivocal: “VCE will continue to offer industry-leading Vblock Systems, which feature best-of-breed compute and networking exclusively from Cisco. VCE is committed to the roadmap of ACI-enabled Vblock and UCS innovations, with the intention to accelerate growth for VCE’s portfolio.”
Are we really supposed to think there’s nothing substantial here in the Vblock components sense – that the game continues as before with no real change? In that case, why re-organise? Is something else going on that we don’t know about?
Or is the FAQ wording very precise indeed, and what we can draw from it is this: “VCE will continue to offer industry-leading Vblock Systems, etc..." and will develop other systems that don’t use Cisco servers and networking? The statement doesn’t say VCE will “only” offer Vblocks using Cisco servers and storage after all. That missing “only” could be highly significant.
Alternatively, we seekers after truth here at storage desk could be chasing red herrings.
Whatever happens, we would expect Cisco’s influence on Vblock componentry to decrease though, as EMC closes the vice on VCE. ®