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Michael Dell, Sanjay Poonen: VMware Spin-Off To ‘Drive Growth’

‘We believe deeply in the better together power of these two great companies. Plus, I’ll remain chairman of both companies and you can be sure I’ll be working to ensure the partnership only continues to grow,’ says Dell Technologies CEO Michael Dell.

VMware and Dell Technologies’ top executives say Dell’s spin-off of VMware this year will create net new growth opportunities thanks to a commercial agreement put in place for “at least” the next five years with a “rich pipeline” and future joint innovation ahead.

“Look, everybody wants us to continue [the partnership] because it’s clearly worked very well,” said Michael Dell, founder and CEO of Dell Technologies, during a media and analyst Q&A session at Dell Technologies World 2021. “We believe that the spin-off will drive additional growth opportunities for both Dell technologies and VMware, and at the same time, unlock significant value for stakeholders. … We believe deeply in the better together power of these two great companies. Plus, I’ll remain chairman of both companies and you can be sure I’ll be working to ensure the partnership only continues to grow.”

Michael Dell said the five-year commercial agreement between Dell and VMware “is unique and differentiated” while also allowing flexibility for both companies.

“The key message for our customers and partners is that with this commercial agreement, nothing changes for at least the next five and a half years,” Dell said. “Our current momentum in roadmaps and R&D innovation, all the work we’re doing together with sales and support -- all that moves forward full steam ahead.”

[Related: Dell-VMware Spin-Off Deal: The 4 Biggest Myths And Rumors]

VMware’s chief operating officer Sanjay Poonen, who some believe could become the company’s new CEO, said the Dell-VMware partnership “is stronger than ever.”

“The last four or five years of working with Dell Technologies have been spectacular. And nothing should change in the next, at least five years I hope, or maybe 10 or 20 years to come,” said Poonen.

VMware’s COO touted the two companies joint engineering innovation and go-to-market partnership over the past several years which he says will not stop anytime soon. Furthermore, the two companies have common channel partners who are expecting the partnership to continue smoothly for their customers.

“Whether it’s VARs, distributors or system integrators — those partners want us to increasingly see these engineered solutions delivered with services in this digital foundation for a multi cloud world. So the future couldn’t be brighter,” said Poonen. “I’m personally very excited about the solutions that we have and the customer conversations that we have jointly with them.”

Dell confirmed this year that it will spin-off its 81 percent stake in VMware to Dell Technologies shareholders in the fourth quarter of 2021. Michael Dell is expected to own approximately 41 percent of VMware following the spin-off, while Dell’s longtime private equity partner Silver Lake will hold an 11 percent stake in VMware.

Once the transaction is complete, VMware will be a standalone company.

Zane Rowe, VMware’s interim CEO and chief financial officer, said the spin-off is good news for customers.

“Now as a standalone company, we’ll have more strategic and financial flexibility to pursue our any app, any cloud and anywhere vision to accelerate our customers digital transformation,” said Rowe during the Q&A session at Dell Technologies World. “So the simplified corporate ownership structure and the governance model to support that, really enhances our growth opportunities and allows us to be included in [things] like the S&P 500. So as Michael pointed out, it’s just it’s a great thing for both companies and for our collective customers so we’re excited about it as well.”

Over the past several years, Dell and VMware have worked to create market leading jointly engineered solutions together such as VX Rail for hyperconverged infrastructure and Workspace One.

“There’s four or five key engineered solutions that we spend a lot of time regularly [on] making sure their tightly integrated and deliver great value more than just a PowerPoint diagram,” VMware’s Poonen said. “And then in our fields, we’re working very well together. The top 150 customers, we have select accounts where we go together, and these represent some of our largest customers that are doing business with both of us.”

Finally, Jeff Clarke, chief operating officer and vice chairman of Dell Technologies, said the Dell and VMware customer pipeline is “rich” with opportunities ahead following the spin-off.

“The pipeline is rich with future opportunities -- whether we look at what’s happening at the edge, whether we look at what’s happening with 5G and what could be built out in a private 5G network,” said Clarke. “The work that we’re doing together on the next generation data center and composability, our teams are deeply engaged on the next generation a wave of technologies. So there’s equal, if not more, opportunities with partners going forward than we demonstrated to date. I’m pretty excited about that.”

Dell Technologies Word 2021 runs May 5-6.

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