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VCE's long-term viability is still a subject of much debate. For starters, little is publicly known about its actual revenue -- EMC and Cisco both recognize revenue from Vblocks sold in their respective P&Ls, which is how they explain that the "losses" incurred from investing in VCE aren't actually losses.
In addition, as financial analysts have frequently stated, it's hard to determine how many customer opportunities VCE gets into that Cisco, EMC or the other companies wouldn't be able to access in a V plus C plus E or other a la carte sales approach. There's also the question of alliances, and given the moves made by both EMC and Cisco -- and VMware's eye-popping $1.2 billion acquisition of potential Cisco SDN competitor Nicira -- they suggest a fraying relationship between VCE's parents.
"Considering the changing alliances in large cap tech, we wouldn't be surprised if the Cisco, EMC and VMware partnership, VCE, is soon shuttered," wrote Mark Sue, managing director with RBC Capital Markets, in an October note.
Couple that with VCE's early channel headaches -- confusion over messaging and who gets paid when -- and the warring sales factions with Cisco and EMC that would rather take deals piecemeal to meet individual quotas, and VCE still faces significant hurdles.
"I still can't see a situation where V plus C plus E isn't a better option for 95 percent of potential customers," said the second solution provider. "They've enabled more partners to sell VCE but they still haven't found a way to get all the Cisco and EMC guys to play nice and support these sales. It's easier on everybody, including the customer, to buy what they want in pieces and have their guys assemble it."
Some solution providers have found more success pushing the integrated Vblock than the piecemeal model, however. World Wide Technology's Berg said that now that more customers understand the appeal of converged infrastructure, they also understand that by buying pieces separately and building it themselves, what they end up paying in labor, support and other orchestration costs often eats up what they might think they save by doing that instead of paying a premium for a Vblock.
"More customers now are looking under the covers and seeing that they do save in rack-and-stack and other things that they're not really thinking about during the discussion phase," Berg said. "You'll always have technical guys who think they can build it better than VCE can, but at the executive level, the VCE model is appealing."
Converged infrastructure is a tide carrying all boats, acknowledged partners. All of the VCE partners in attendance at the Dallas event carry converged infrastructure solutions other than VCE, including the NetApp-led FlexPod approach, the EMC-led VSPEX reference architecture approach, and other reference architectures and models from the likes of Cisco, HP, Dell, Juniper and others. Their bets are covered, partners say.
"We sell FlexPod, VSPEX and VCE, and each depends on the customers and the size of the deal," Balistrieri said. "What's nice about VCE is that you do have the built, tested package into which a customer can go in and look at easily migrating a big application. The converged infrastructure market is growing so there is a market for all the approaches."
NetApp, for example, might be able to count three times the number of customers for FlexPod than VCE has for Vblock. But VCE executives reiterated to partners that Vblocks are exactly defined, and because FlexPod is a reference architecture and not itself an integrated stack, its definition is by nature much looser.
"They talked about how it is very easy to count what a Vblock is vs. that with FlexPod; it's certainly more gray," Long View's MacDonald said. "There are definitely some questions about how many FlexPods really are out there because of how you define it. But the overall market has shifted, and we're all seeing that shift of customers going from siloed buys of storage or networking to converged infrastructure. That's further validation for VCE, FlexPod and this whole market."
PUBLISHED DEC. 5, 2012
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