COLUMN: A Tale Of Two VMwares

CRN’s Steve Burke contrasts Michael Dell’s channel leadership and nurturing of VMware as a crown jewel for Dell EMC with the shock to the system that partners have experienced in the wake of Broadcom’s $69 billion acquisition of VMware.

When Dell Technologies Chairman and CEO Michael Dell spearheaded the acquisition of EMC and VMware in a $67 billion deal eight years ago, he made sure partners had the sales investment and commitment necessary to grow and scale the business.

Dell told CRN at the time that the company was “humbled by the responsibility that we have to customers, to our partners, to our 140,000 team members we have in the company. When you think about the world impact the company has, we’re humbled by that.”

Humbled indeed. Dell, who became chairman of the VMware board of directors, personally ensured that partners of both EMC and VMware committed more sales and technical talent to sell the combined Dell-EMC-VMware portfolio.

In the first fiscal year after the deal, Dell EMC invested $150 million in channel incentives. “We want partners to be aggressive and attack the market and know how much more money they are going to bring home,” said John Byrne, who was Dell EMC’s global channel chief at the time and who is now president of sales for global theaters for Dell. “We want them pay off their mortgage, feed their kids, and get their kids to university.”

Dell leveraged the power of the VMware software stack but also had the foresight to let VMware continue to operate independently.

“I think Dell EMC and VMware go together like peanut butter and chocolate,” Michael Dell told attendees of VMware’s annual conference in 2017. “We’ve got a great thing going here. We’ve talked a lot about revenue synergies. And that was driven not only by cross-selling, but also a deep level of technical integration innovation in creating new products and solutions. We’re seeing that in all the things that we’re rolling out.”

Former VMware CEO Pat Gelsinger, now Intel’s CEO, called the Dell acquisition of VMware at the time a case of “independence, ecosystem and acceleration.”

Contrast Michael Dell’s channel leadership and nurturing of VMware as a crown jewel for Dell EMC and the industry with the shock to the system that partners have experienced in the wake of Broadcom’s $69 billion acquisition of VMware.

The amount of fear, uncertainty and doubt that has accompanied the deal is unprecedented in a technology acquisition of this size. In the two months following the close, VMware laid off thousands of employees, killed VMware’s partner program, terminated all of its partner agreements and forced partners to reapply for their roles, and took the top 2,000 accounts direct.

Throughout all the turmoil, CRN has reached out unsuccessfully time and time again to speak with Broadcom CEO Hock Tan about how partners can work with the new VMware by Broadcom to accelerate sales growth. So far, nothing but crickets.

At the end of the day, Michael Dell’s embrace of the channel benefited Dell, partners, customers and shareholders.

Tan would be wise to look at the Dell playbook and the value it created across the entire ecosystem. The difference in the two strategies brings to mind a reference to the Charles Dickens line from “A Tale of Two Cities.” “It was the best of times,” referring to Dell’s acquisition of EMC and VMware. “It was the worst of times,” referring to Broadcom’s acquisition of VMware.