VCE Merges into EMC: Change Is in the Wind

Fifty Start-Ups Disrupting Their Industries

VCE was the most successful joint venture I’ve ever seen. Growing at over 50 percent year over year, it has been cutting a broad swath through the IT industry, despite the fact that most folks didn’t think its solution could work, even after customer after customer repeatedly testified that it did, swimmingly. That is one of the two amazingly weird things about VCE: The first is that folks just don’t believe it can work; the other is that a joint venture managed by large partners could make decisions timely and well.

Today, though, VCE and EMC announced that the joint venture is done and VCE will become wedded to EMC. Intel, which was just in it initially to get the firm off the ground, existed as a largely silent partner and will now exit. Cisco will drop to a minority investor, and EMC will take complete control of the company that it created in the first place. VMware’s role remains largely unchanged.

Here is what I think this means.

For Existing VCE Customers

For existing customers, I don’t think this really means much of a change. VCE’s products and support aren’t going away, EMC will take a more aggressive role in assuring their experience (and since it has one of the highest Net Promoter Scores in the industry, that’s not a bad thing), and customers will work with, for the most part, the same folks at VCE. I see no real cause for concern, because EMC was always the most powerful of the partners in this deal, and its power, effectively, just became absolute.

VCE remains a separate entity, however, and EMC has showcased that it knows how to successfully manage companies at arm’s length. So focus on the solution won’t fall off in favor of focus on storage. At least for the near term, concerns about organizational changes that might damage a deployment or adversely affect service and support are unfounded—though I’d anticipate competitors will try to make the arguments, regardless.

VCE Road Map

I think the roadmap for VCE will expand. VCE has already been exploring increased configuration flexibility to address the increasingly unique needs of industries, like health care and media creation. This will provide it with opportunities to more aggressively use other EMC products and technologies. Other partners like Lenovo can move more aggressively at opportunities below the enterprise level. These are areas where both of those companies play, but VCE doesn’t at the moment.

It isn’t just enterprises that would like a fast-deploying, comprehensive, converged-IT-in-a-box solution. The benefits of fast time to production, extreme workload flexibility, and low support costs apply to all sizes of business. So I expect that VCE will begin to use the other federated companies’ products (e.g., VMware/Pivotal) and partners like Lenovo more aggressively to address opportunities that are out of its comfort zone today.

Wrapping Up: VCE Is Dead, Long Live VCE

It is kind of a sad moment for me, because VCE was the stellar example of how a joint venture could be done successfully, and it was a huge feather in Joe Tucci’s cap, because he deserves the credit for making it happen. But while VCE as a joint venture is ending, it is immediately reemerging with more opportunity and choice than it had going in. I think it still stands as an example of how a joint venture can be formed and as an example of how one can transition for the long haul. I think Apple and IBM could learn a lot from this process.

In the end, this is almost a no news event, because it will involve very few changes near term, but in the long term, the firm will be more flexible and likely more creative, as well. So VCE really didn’t die; it simply emerged from its joint venture cocoon and over the next few months will be spreading a new set of wings. How’s that for ending on an existential note?

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+