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How VCE created an amazing joint tech venture

Rob Enderle | Oct. 27, 2014
VCE is unique not only in how successful it is, but in that it is making an organizational shift not when failure is eminent but while it is still thriving, suggesting it has sidestepped the problems that might have derailed it.

Cisco and EMC were equals and both provided and will continue to provide technology critical to the solution. But strategically the products in both Cisco and EMC were shifting very differently when it came to the public and hybrid cloud. EMC's strategy is to focus on selling to public cloud services and Cisco appears to be more focused on building their own. Both strategies have merit with companies like Dell going down a similar path to EMC's and companies like IBM more aligned with Cisco but there is no middle ground here; you have to be fish or foul.

If you are doing your own cloud service, you won't be able to successfully sell into competing cloud service shops. It is absolutely binary, there is no middle ground, and I expect this goes to the core of why VCE executive management decided to reform the company.   VCE originated in EMC and now it is going back to the firm that came up with the idea for it.  

VCE's Mid-Market Problem
In addition, VCE's unique approach to the market and related savings is clearly just as attractive to the mid-market as it is to the enterprise, but direct sales are too costly for this segment. Of the partners EMC has the strongest mid-market sales organizations focused on supplying product through distribution. EMC has been aggressively pushing its own products through this channel successfully for several years and has put together compensation structures that favor third-party distributors over internal sales resources wedding these third parties to EMC far more tightly. This channel is capable of selling properly scaled-down VCE products to this market further showcasing the benefits of this move to put VCE under EMC.

Going Forward
Cisco remains an important part of the solution going forward, but the direction with regard to public and hybrid cloud will be on selling solutions to public cloud providers not becoming one (which VCE couldn't really do anyway because it would have created a competitive problem with Cisco). In effect there was no real choice here because VCE was barred on both sides from becoming a public cloud provider and by taking this path it can also provide solutions to Cisco's effort as well as dovetail nicely with EMC's.

VCE will be moving solutions down to the mid-market and adding distribution to direct sales as their primary method to get there. So the change better aligns the company strategically with both founders cloud efforts and moves them into the mid-market more aggressively thanks to better access to EMC's mid-market sales channels.

Intel is out of the deal now, its job of funding being over, and Cisco is an important stakeholder and part of the solution but EMC leads alone and VMware remains since they are part of the EMC family.


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