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Summary:

Now that VMware has bought Nicira, doubts about the future of the VCE effort have multiplied. Word is that with Nicira in the fold, VMware and EMC get much more competitive with Cisco, stressing the VCE partnership all three companies founded three years ago.

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Now that VMware has bought Nicira and its software-defined networking expertise, doubts about the future of the VCE Vblock effort have multiplied. VCE is the three-year-old partnership between EMC, Cisco and VMware. The goal was to sell Vblocks — converged bundles of EMC storage, Cisco servers and networking and VMware virtualization. The theory was that companies want pre-integrated data center technology as opposed to piece parts.

There was strife early as could be expected when three tech powerhouses with their own agendas try to make nice. What’s new is that with Nicira in the fold, VMware gets more directly competitive with Cisco, further stressing the partnership. Cisco is attacking software-defined networking with its $100-millionInsieme spin-in.

“I think [the VMware-Nicera deal] is the last nail in VCE’s coffin,” said Vanessa Alvarez, president of Alvarez Consulting.

Even Vblock fans cool to VCE

Even VCE reseller partners once jazzed about selling Vblocks are dropping or reconsidering the product. Their question: Why devote time and resources to something that even the parent companies seem to be forsaking?

“I feel both Cisco and EMC are hedging their bets with their own individual solutions and they will continue to support VCE when the customer truly wants a converged infrastructure solution and they are competing against an IBM, HP or Oracle all in one solution,” said Jack Kaiser, SVP of sales for Focus Technology Solutions, a Seabrook, N.H. tech reseller. Companies like Focus that partner with all three VCE founders, have to figure out what’s best for the customer, he said.

Some see the appointment of EMC’s Pat Gelsinger as CEO of VMware as a move by EMC CEO Joe Tucci to tighten his hold on VMware. (EMC owns an 80 percent stake in the virtualization leader.) It’s clear to them that EMC with VMware and now Nicira is on a collision course with Cisco that leaves VCE and Vblock vulnerable.

“There’s going to be a lot more competition than collaboration going forward,” said Constellation Research CEO Ray Wang.

Others said the demand for high-end converged hardware really isn’t as high as advertised as companies put more of their workloads in the hands of cloud service providers, most of the which run commodity hardware and software.

VCE players say it’s  business as usual

VCE and its parent companies insist nothing’s amiss. On EMC’s second quarter earnings call this week, Tucci said he was happy with VCE traction. “VCE is winning new customers at a strong rate … [and]  remains on track to reach the $1 billion run rate for Vblocks.”

A VCE spokesman said the company, with 1,200 employees, is growing, adding a new facility in Raleigh, N.C. It recently hired Praveen Akkiraju, a Cisco veteran, as CEO. And, demand for converged hardware continues to grow, he said, citing Wikibon numbers, 

Whether that growth proves meets expectations and is enough to sustain multiple converged infrastructure bundles when more work is flowing to webscale data centers running commodity hardware, remains a very big question.

Photo courtesy Flickr user qthr

  1. Jay Cuthrell Friday, July 27, 2012

    Hey Barb — two things… [1]

    First, with all due respect to the wide world of analysts and those that appear to be providing tasty quotes here, it’s a curious sample considering the VCE Partner lists are in the open [2] and that list is growing globally.

    Second, and this isn’t in any way a Creative Commons critique at all but… I pretty sure I took this photo included in the post. So, I’m curious where you came across it? Twitter? Instagram? Flickr? I’m not asking for attribution just curiosity as I tweet, archive, and tag stuff around the Internets. Thanks!

    I’m not going to weigh in here as a comment on GigaOm regarding the conjectural content contained in your post but it might be worthy of a blog post of my own when I have more time — end of month = busy times.

    -Jay

    [1] p.s. obvious disclosure is obvious in that I’m one of those folks that work at VCE and I can personally confirm that I don’t keep night hours, suck blood, hang around with bats, or sleep in a coffin…

    [2] http://www.vce.com/partners/

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    1. Jay Cuthrell Friday, July 27, 2012

      Eeek. This comments thing prevented edits. Second paragraph edit below:

      Second, and this isn’t in any way a Creative Commons critique at all but… I am pretty sure I took this photo you have included in the post. So, I’m curious where you came across it? Twitter? Instagram? Flickr? I’m not asking for attribution just curiosity as I tweet, archive, and tag stuff around the Internets. Thanks!

      [3] https://twitter.com/qthrul/status/108596075266457600
      [4] http://instagram.com/p/LsyOH/
      [5] http://flic.kr/p/app84B

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    2. Jay, did VCE make a profit in 2011?

      What was the average margin on a vblock?

      Was the sales strategy one of selling at a loss in order to get market share?

      Are VCE reps compensated differently than EMC and Cisco reps? (ie) Getting commissioned on the total sale versus being penalized for discounting past certain price floors like the reps at EMC/Cisco? (thus allowing VCE to sell at a loss?)

      How has turnover been in the presales consultant and sales teams?

      How has turnover been in the executive ranks?

      Aren’t most executives that came over from Cisco when VCE was formed gone because the exEMC executives pushed them out?

      Were parents/partners/customers confused as the messaging changed from “You have to have UIM,” to “We have two flavors of UIM,” to “You don’t need UIM, just use the individual element managers?” And was all of the messaging change done over the course of 2 quarters?

      Do partners make more margin by selling the individual pieces instead of a vblock?

      Weren’t customers actually talking to a Cisco support person when they called VCE support for most of 2011? (ie) Instead of having a trained VCE support person answer the phone like they had been told it was just a Cisco support rep taking the calls and trying to determine which parent company to send the support ticket to.

      Aren’t most of your reference customers service providers instead of organizations using vblocks in house?

      Are there strong, longtime EMC partners that refuse to become VCE partners because the expense of adding and training a full time engineer isn’t worth the small volume of business they would do with VCE?

      Are there EMC and Cisco district managers that are ordering their reps to sell their products standalone instead of via vblock?

      Are prospects concerned about parent company commitment to VCE when they see Cisco partnering with NetApp on Flexpod (Cisco covers NetApp’s costs incurred due to Flexpod)? Are customers concerned about parent company commitment to VCE when they see EMC partnering with other compute suppliers for VSPEX?

      Does the marketing around VSPEX that stresses how partners have more influence/control on how the VSPEX is configured in order to better serve their customers illustrate how EMC is responding to partners’ complaints about vblock’s inflexibility and the deals they are losing due to the take it or leave it nature of vblock?

      Was VSPEX created to keep frustrated VCE partners in the EMC fold instead of selling Flexpods to their clients?

      Has UIM ever been stable on a VMAX based vblock?

      Are you worried that Cisco will buy Citrix and NetApp?

      Thank you and I look forward to your response!

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      1. David — please see my comment to your last comment.

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    3. One last question.

      Do partners also quote a system made of piece parts on the same quote as a vblock quote in order to better compete with other VARs that are just selling systems made of piece parts? In other words, do VCE parters present a VCE option and a cheaper non VCE option to ensure that they don’t price themselves out of the deal?

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      1. David — Nice comment bomb. I won’t interact with comments on other folks blogs. It’s clear you know how to cut and paste. So, you are welcome to put this into your blog (or create one) and I’ll be happy to comment on each item in a post of my own.

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      2. Hi Jay, no need to cut and paste when I’m speaking from experience. I won’t start up a blog in order to get my questions addressed when I already know the answers. The purpose of my response was to let you know that there are many of us that know the truth.

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  2. @jay, the photo credit got cut. My apologies. Don’t know if it’s you, but it’s in there now. Very sorry.We use flickr most of the time.

    again, apologies. it’s updated… and no one thinks anyone from vce sucks blood.

    have a good weekend.

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  3. Christopher Kusek Friday, July 27, 2012

    Not to contribute to the nay-sayers, or even be the nay-nay-sayers respectively but I read this with an open mind, a curious soul and a little bit of confusion.

    I follow, monitor and analyze the trends and patterns with regards to VCE and perception in the industry. Usually it is the few who tend to dismiss VCE at all, and when it comes to Vanessa’s quote ‘Last nail in VCE’s coffin’, I took a concerted effort to look for openly referenced ‘nails’ or ‘coffins’ respectively, and other than an analysts comment the industry hasn’t been reflecting that, nor have the numbers themselves.

    Leading me to ask this sole question Barb – in your opening statement in the comments you state, “Now that VMware has bought Nicira, doubts about the future of the VCE effort have multiplied.” I would love to see some more collateral around these multiplicative doubts (online or offline, whichever you prefer. :))

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  4. @christopher. i talk with lots of VCE partners both current and past. They say interest in vblocks has always been high, the problem is that once the sale is in process, vblocks quickly fall apart as the sales reps of the three parent companies — one in particular — take their part of the sale direct. Once that happens, poof, no more vblock.
    I would love to see sales figures but no one is providing them.

    lots of partner sources on this, including partners that are still part of the program who –understandably do not want to be quoted by name. The analysts quoted in this story hear the same things.

    I guess I’m just saying don’t shoot the messenger i have no axe to grind vis a vis VCE.

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    1. I wonder which company takes their “part” direct?

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      1. i bet you can guess.

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  5. Good article. I agree that this will be a major problem for VBlock and VCE. EMC/VMware will be openly attacking Cisco’s core market, at least indirectly. This partnership was always doomed. It was absurd for anyone to think that EMC, VMware, Cisco and BMC would go for long without some competitive disruption.

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