10 Signs The Cisco-EMC Partnership Is Fraying

Cracks In The Facade

The strategic vendor partnership between Cisco and EMC -- thought at one point to be slam-dunk candidates for a merger -- isn't going away any time soon. Right?

Thanks to recent trends in the industry, and a series of moves made by both companies, there's plenty of reason to think Cisco and EMC are more than comfortable keeping the other at arm's length. Here are 10 that come to mind.

EMC's Lenovo Pact

EMC in late July confirmed a landmark server/storage pact with Lenovo, under which Lenovo servers will be the preferred server platform for EMC VSPEX reference architectures.

Both EMC and Cisco were quick to tell anyone who'd listen that Cisco and Lenovo play in completely different segments of the server market and that the Lenovo involvement posed no threat to EMC's Cisco partnership. But some partners and several analysts cautioned that the move was a clear indication EMC was looking to put some distance between itself and its Cisco associations -- and be more diversified in its server market relationships.

VMware's Nicira Acquisition

Software-defined networking (SDN) startups are starting to become hot properties, and none hotter than Nicira, on which VMware pounced for the princely sum of $1.2 billion in July. While the exact nature of how Nicira's virtualized networking platform competes with Cisco's networking portfolio is a raging technical debate among networking industry pundits, there's no question VMware -- which is majority-owned by EMC -- has planted a flag in a market every major networking vendor is going to have to address. And according to some reports, Cisco itself was in the mix to buy Nicira before being outbid.

Cisco's Insiemi Investment

Cisco has sunk $100 million into a startup called Insiemi, run by the same engineers who had a hand in previous Cisco "spin-in" acquisitions like Nuova Systems and Andiamo Systems. Along with a few software-centric programs and offerings launched by Cisco in June, Insiemi is expected to be the company's major play in software-defined networking -- and will compete head-on with other SDN companies like, yes, VMware-owned Nicira.

But there's also plenty of industry speculation that Insiemi has major storage implications for Cisco, too, and may ultimately include some distributed data storage functions that will put Insiemi at odds with Cisco storage partners. The idea of Cisco buying or building its way into the storage market isn't exactly a new one, but one plenty of industry pundits are once again floating.

Cisco's Fusion-IO Relationship

Cisco in June signed an OEM relationship with Fusion-IO, an emerging maker of high-performance PCIe flash storage adapters, intending to use Fusion-IO's technology in its Unified Computing System (UCS) servers. But Cisco already had an agreement in place with EMC and LSI for those companies' VFCache technology, raising questions about how Cisco would favor which PCIe flash storage adapter technology where.

A spokesperson for Cisco-EMC joint venture VCE told CRN in July that VCE's priority is the LSI solution and has no plans to integrate Fusion-IO technology for Vblocks. But most observers saw the potential conflict right away. As one partner put it, "(John) Chambers [left] is smart. He's looking at new ways to sell UCS. He doesn't want to give EMC too much power."

Cisco's Momentum With NetApp

Cisco has a delicate balancing act with EMC, with whom it's tightly partnered in VCE and the Vblock concept, and NetApp, EMC's scrappier archrival, which partners with Cisco for the FlexPod reference architecture. But right from the get-go, the FlexPod model was an easier sell for solution provider partners, and while Cisco and EMC VARs agree the VCE channel approach has been much improved in the past year, the momentum Cisco's had in its NetApp partnership is lapping the VCE/Vblock momentum, and then some.

According to a presentation to solution providers at Cisco Partner Summit (left) in April -- confirmed to CRN by multiple attendees -- Cisco said the number of VCE customers at that point was about 450, and the number of FlexPod customers about 850. (A NetApp representative recently told CRN that the number had hit 1,050 and counting by early July.) The two approaches target different segments of the market and very different customer needs, but as one partner of both EMC and NetApp described it, "Customers are customers."

Ongoing VCE Tension

VCE the company has done much to appease partners frustrated by the early VCE channel program rollout and the deal-stalling efforts of having to register Vblock deals with multiple vendors. But sources tell CRN that tension remains between some of the most important stakeholders in the VCE relationship: the Cisco, EMC and VCE sales teams themselves.

"Cisco and EMC reps both hate VCE," said the CEO of a major East Coast solution provider and VCE partner. "Why? It slows down deals and it makes them miss quotas. I've seen deals dismantled at the last minute just so the Cisco and EMC guys can make their [individual] numbers. With VCE you're not dealing with one company, you're really dealing with four companies."

Cisco's VCE Oversight

VCE in mid-July named a new CEO, Praveen Akkiraju (left). It's a significant move considering Akkiraju -- a 19-year Cisco veteran and most recently head of its Services Routing Technology Group -- marks the first instance of a major Cisco executive taking a leadership role at the joint venture, whose executive team is heavy with EMC veterans. VCE described Akkiraju's appointment as an "extension" to the VCE management team, which includes President Frank Hauck and original CEO, now Chairman, Michael Capellas.

Whether Akkiraju's appointment is a sign Cisco itself wants more control over VCE is open to interpretation, but Rob Lloyd, Cisco EVP, worldwide operations, did say that Cisco would be taking a more active role in managing the venture.

EMC's VMware Oversight

In what's so far been one of the year's biggest executive changes, Paul Maritz (left) moved out of the CEO spot at VMware and was replaced by Pat Gelsinger, former president and COO of EMC's Information Infrastructure Products division.

EMC pitched the move as a way to shore up VMware's position as a virtualization and cloud infrastructure powerhouse. But some observers took the Gelsinger promotion as a sign EMC wants to tighten its grip on VMware, which partners all over the industry, including in relationships such as FlexPod, with EMC storage enemy NetApp.

"I remember when EMC acquired VMware, and how it was all going to stay separate and they weren't going to swap executives, but no one ever believed that," one longtime VMware and EMC partner told CRN.

Recent History

Take a look at recent history and remember that both Cisco and EMC have left what were thought to be major, fruitful strategic vendor partnerships behind when it became clear their missions were no longer aligned. Cisco's stepped-up competition with HP in the networking and server spaces led to an ongoing war between the two titans -- and a very public ending of HP's reseller agreement with Cisco in February 2010 after nearly two decades of partnership.

And EMC closed out its prior relationship with Dell, once its biggest storage reseller, but now a competitor following Dell's acquisitions of EqualLogic and Compellent and its whole-hog embrace of the storage market. The Dell-EMC agreement formally ended in October 2011.

The Industry's Stacking Up

There's little question both Cisco and EMC -- and their hard-charging, hyper-ambitious leaders -- want to each own more of the customer spend and the technology segments in which that spend is occurring.

But look around the industry, and all the major players are stacking up their assets in favor of fuller-figured portfolios: Microsoft, for example, with its expansions beyond software and into the UC and hardware markets, or Oracle, with its Sun buy a few years ago and its expanding virtualization and data center management purview, or Dell, which in the past year alone has bought networking, storage, security, MSP and cloud companies. Is there going to be anything left but co-opetition between the tier-one vendors -- partnering in some areas, competing in others -- when the latest consolidation wave breaks?