As VMware prepared to enter the Dell Technologies orbit in the wake of the biggest merger in industry history, CEO Pat Gelsinger grappled with weighty decisions that would reshape the destiny of the company. Rarely before had such an established software giant faced disruptive threats of such severity on multiple fronts. Public cloud operators were proclaiming the end of private infrastructure; container enthusiasts were dubbing Docker a VMware killer that would supplant virtualization.
After more than a decade of dominance in the data center, with VMware's core business under siege, Gelsinger knew he and the board faced some tough decisions.
There were seven "final" meetings of VMware's management team, three "final" board meetings, before consensus formed around a bold new strategy: Rather than battle emerging technologies, VMware would embrace them with breakthrough products and partnerships. It would leverage its existing technology to become a connective fabric, the central nervous system linking the heterogenous platforms many expected to undercut its business.
"It's a multi-cloud world and I think we're uniquely positioning VMware to be an enabler in the multi-cloud world that really benefits the core VMware customers," Gelsinger told CRN in an exclusive interview detailing its remarkable transformation. "Any technology company, if you're fi ghting the wave of technology, you're likely to become driftwood. If you're riding that wave of technology, you're likely to become a very powerful and customer-valued entity in the future. You either are on the right side of it or you're not."
Getting on the right side of the public cloud wave, however, posed a daunting challenge fraught with risk. Could VMware partner with Amazon Web Services? Could it trust Microsoft? Would Google emerge as a serious enterprise player? As difficult as those questions were, the private cloud kingpin knew it had to position itself to thrive in an IT landscape increasingly controlled by those companies.
Solution providers say the multi-cloud strategy is a winning hand for them and VMware.
"We are seeing very wide adoption of multi-cloud, public and private, on-prem and off. We're seeing customers starting to embrace it more and more every day," Chuck Farrow, vice president of strategic partner alliances at New York-based Logicalis, told CRN.
"The way Pat's taken the company and acted upon their vision, making that turn, their investments to make them more complete around the data center, tremendous things are going to come from that," Farrow said.
Investors, for their part, also are buying into VMware's transformation story. VMware shares closed trading at $109.20 on Sept. 28 — up 50 percent since Sept. 7, 2016, the day Dell Technologies completed its $67 billion acquisition of EMC and became VMware's de facto owner. That surge has translated into nearly $14 billion in additional shareholder value.
One beneficiary of the soaring stock price has been Michael Dell, who took over as VMware's chairman the same day the deal closed.
"I think Dell EMC and VMware go together like peanut butter and chocolate," Dell told attendees of VMware's annual conference, VMworld, during a question-and-answer session. "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."