EMC and Acadia: Vmware has something to lose!

Last week was a very strange one, we have seen the following three news about EMC:

  1. EMC,Cisco and VMware announced Acadia ;
  2. STEC showed a bad Q3 because EMC slowed orders of SSDs ;
  3. EMC is losing its OEM agreement with Dell.

Well, what is happening?

Try to read the three news from the last to the first… and you’ll end up with a different point of view!!

Yes, you know, the partnership between Dell and EMC has seen some shadows in the last year because Dell is pushing hard Equallogic! Equallogic, bought from Dell more than a year ago, is the preferred solution for every SMB SAN sold, this new strategy hurts low and medium CX sales! Furthermore, Dell has bought Perot systems (a service company) a month ago and there are a lot of rumors about some other potential acquisitions regarding storage… 3Par is in the first line to complete the Dell product line for enterprises and it is a direct competitor of Symmetrix products by EMC!

EMC sales aren’t very shiny, i would like to cite some comments of the financial Times about the last earning report: “Earnings for the quarter were $298.2m, or 14 cents a share, down from $393.4m, or 19 cents a share, during the same period last year. Revenue, meanwhile, dropped 5.3 per cent to $3.52bn.” and “EMC’s sales were helped by two of its recent acquisitions… [DataDomain] [VMware]“! (full article is here)

News from STEC (enterprise SSDs manufacturer) aren’t very good and raised comments by many bloggers (i.e.: here and here) about adoption of SSD technology. EMC is the most important customer for STEC and was the first company to deliver SSDs to customers but without considering SSDs as a new technology just only new drives to fit in their standard arrays!

SSDs cost much more than traditional drives and they are smaller, so customers needs to do a lot of human work to reorganize the layout of their arrays to get just little advantages! The answers from EMC to these problems are in a huge delay: the already announced automated tiered storage feature, FAST v1, will not solve the problem because it works at LUN level and the Version 2 won’t see the light before, at least, 8/9 months! wait and hope! We can add that competition from next generation storage vendors is very hard and the legacy architecture of EMC’s storages is not the best one to fit in fully virtualized environments. Sales are declining and customers are looking all around to find new solutions to cut the TCO, EMC is suffering about this and they need to grant deep discount to not lose customers… not very good for revenues!

And here you are the last news and an attempt to advance an answer: Acadia (what a name!).

Acadia is a joint venture between EMC, CISCO and Vmware plus a little participation from intel.

Apart Intel, probably Cisco is the unique big vendor to sell Intel servers only, this JV will be a big reseller of prepackaged stuff (named v-blocks) from the three vendors with some services on top to help enterprises implementing the solutions proposed.

Well, I think this is a big deal for CISCO because they need to begin to sell their brand new hardware and Acadia doesn’t overlaps with actual resellers mainly focused on networking. Of course CISCO reseller with different agreement for Storage will not be very happy about this internal competition but it’s not a problem of mine.

But what about EMC and VMware?

EMC needs to answer, as you read above, to declining sales due to strong competition and lose of partners. The move to join forces with CISCO to have a complete stack is good for them. (IMHO) the strategy is to hide the defects and costs pushing for an integrated stack!

But my thoughts are going to the dowry: VMware!

Yes, because WMware was an indipendent software company with similar OEM agreements with every hardware vendor but now they have a privileged path to CISCO! Every partner of Vmware in the world is asking himself what will happen when they will face Acadia: who will have the best price? who will have the best presale support and commitment?

And what about the competition? All the IT industry is trying to understand if VCE is a right move or not, and the most thoughts are negative. I think that we will soon see a prompt answer from HP, IBM, Dell and Sun(?) probably with solutions more open and focused on Hyper-V or Xen..

And Customer thoughts? first impressions (here an example) are not very good, but we need to wait a while to understand better the Acadia strategy and approach.

I don’t think that it’s the right choice for VMware! but EMC is the owner and the owner is the Boss!


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