• SMB, MIDMARKET, CHANNEL

    SMB, MIDMARKET, CHANNEL

    Delivering Insights to Fact-based IT Industry
    LEARN MORE
  • FEATURED INFOGRAPHIC

    FEATURED INFOGRAPHIC

    2019 Top 10 SMB Business Issues, IT Priorities, IT Challenges
    GET IT NOW
  • WHITE PAPER

    WHITE PAPER

    SMB Path to Digitalization - Prologue and Epilogue
    DOWNLOAD
  • ANALYTICS & ARTIFICIAL INTELLIGENCE

    ANALYTICS & ARTIFICIAL INTELLIGENCE

    SMB & Midmarket Analytics & Artificial Intelligence Adoption
    LEARN MORE
  • CHANNEL PARTNERS

    CHANNEL PARTNERS

    Transformation or Consolidation
    LEARN MORE
  • CLOUD RESEARCH

    CLOUD RESEARCH

    SMB & Midmarket Cloud Adoption
    LEARN MORE
  • BUYERS JOURNEY

    BUYERS JOURNEY

    Influence map & care-abouts
    LEARN MORE
  • DIGITAL TRANSFORMATION

    DIGITAL TRANSFORMATION

    Delivering Connected Business
    LEARN MORE
  • SAAS RESEARCH

    SAAS RESEARCH

    US SMB & Midmarket SaaS Adoption
    LEARN MORE
  • IT MATURITY SEGMENTS RESEARCH

    IT MATURITY SEGMENTS RESEARCH

    Technology adoption trends by IT sophistication
    LEARN MORE
  • SECURITY RESEARCH

    SECURITY RESEARCH

    SMB & Midmarket Security Adoption Trends
    LEARN MORE
  • IOT RESEARCH

    IOT RESEARCH

    SMB & Midmarket IoT Adoption Trends
    LEARN MORE
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12

Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Dell VDI chief strategist on SMB market penetration game plan

Candid conversation with Dell Cloud-Client Computing chief strategist

Jeff McNaught, Executive Director & Chief Strategy Officer, Dell Cloud Client-Computing and co-inventor of Wyse thin client had a candid conversation with Techaisle on his new product initiatives, focus on security, building solutions for small and medium businesses and renewed attention to channel partners. Jeff is deeply involved in software solutions which includes partner software - Citrix, Microsoft and VMware and is responsible for the cloud-client business which includes devices that Dell build’s exclusively for Citrix or VMware as well as new products and software security offerings. One of his major new initiatives includes simplifying and securing virtual workspaces better than anyone else.

Dell VDI converging on security, cost, complexity and channels

Based on extensive primary research with SMBs and the channel partners, Techaisle forecasts the US SMB VDI market to be US$13 billion in 2020 as VDI penetration increases to 34 percent from the current 26 percent and an increase in number of seats from users who have already deployed VDI. Most of the midmarket firms that have invested in VDI are still experimenting with the technology, and most small businesses are still several years away from even this level of preliminary adoption.

The allure of VDI is clear – but the technology itself and the path to realizing its benefits is still mysterious to many small and midmarket businesses. Techaisle research shows that there is a need for VDI vendors to embark on a messaging exercise that includes - real-world examples of successful deployment of VDI, ease of VDI implementation with the least pain for SMBs & simplification of understanding VDI technology by removing fear and complexity.

Over the last two years Dell has been trying to build a momentum to remove the mystery and reduce deployment complexity. Along the way it has had more successes than missteps and it seems that Dell has reached a stage where it reasonably understands the needs of the end-customers and how to work with channel partners to win business and deploy solutions. Dell has architected multiple VDI solution delivery models for SMBs of all sizes and levels of technology adoption.

Continue reading
  0 Comments

Scale Computing – Hyperconvergence for the SMBs

The rise in virtualization has been driving an accompanying demand for converged infrastructure or hyperconvergence: products that combine processing, storage and networking into a robust and scalable unit that can support and respond to the options inherent in virtualization. While the migration from separate server, storage and networking products to converged infrastructure is still in its early stages, the Techaisle SMB virtualization & converged infrastructure survey shows that it is beginning to gain traction, especially within more sophisticated SMB accounts.

Scale computing, launched in 2008, based out of Indianapolis with development in San Francisco bay area and offices in London, Paris, Toronto and Dubai made its SMB focused hyperconvergence launch at VMworld in 2012. Since then Scale Computing has implemented over 6,000 systems in a little over 1,600 customers.

As per Techaisle’s SMB virtualization and converged infrastructure survey, the key barriers to adopting hyperconvergence within SMBs are high cost of implementation, infrastructure disruption during roll-out, greater-than-anticipated time and resource investment, and the complexity of integrating new infrastructure units with existing infrastructure. For example, a pet peeve of SMBs when using VMware on HP Proliant DL380 G8 is their inability to use cloud migration to upgrade or add G8 or G9. These are the issues that Scale Computing is trying to address. In defense of VMware, although the initial code base of ESX was never built to be self-aware, VMware is working on it.

Continue reading
  0 Comments

VMware – threading the SMB needle

VMware has been in the news recently – a valuable asset for Dell, caught between the Dell-EMC deal (see analysis of the deal here). Just a couple of months ago VMware had its VMworld, a forum for VMware to articulate its strategy to customers, partners, media and analysts. VMware’s 2015 theme “Ready for Any” was centered on the challenges that IT professionals are facing today - security, mobility, application delivery and hybrid cloud – and the company’s strategy of supporting “One Cloud, Any Application, Any Device” as a means of empowering IT management to respond to these challenges. VMware’s vision is to “enable an architecture that lets IT deploy or consume capacity from a cloud without having to worry about the physical location or who the vendor is. To do this VMware wants make sure that different form factors of the cloud (private, public, managed, etc.) connect or are transferable”.

Hybrid IT, including hybrid cloud, is no longer an appealing future proposition; it is a current reality as workloads increasingly run internally on a highly-optimized virtual environment connected to a public cloud, and public cloud resources are being widely used for developing and testing applications to be deployed on private or hybrid clouds. Many workloads process data in the public domain and simultaneously store sensitive data in the traditional data center to meet regulatory and compliance guidelines. Techaisle’s SMB & midmarket cloud adoption survey shows that within SMBs, use of hybrid cloud will continue to increase as both a conscious strategy and as a reaction to use of both public and private resources within a single infrastructure; hybrid use is expected to top 40% within the small business market, and will be used by two-thirds of companies with 100-999 employees.

Over the last two years, as virtualization penetration within enterprises has been slowing, VMware has been broadening its solution portfolio to deliver solutions for management and delivery of on/off-premise IT infrastructure. As a result, VMware’s product line has grown beyond compute: it rolled out vSAN for storage, NSX for network, and vRealize for management. Last year, VMware announced its vision of software-defined data center (SDDC) and introduced EVO:RAIL, which ties VMware software to partner hardware for a hyper-converged appliance. In the most recent VMworld this vision was extended to EVO:RACK: while EVO:RAIL was positioned as "SDDC in a box" suitable for midmarket businesses, EVO:RACK (now marketed as VMware EVO SDDC) is aimed at large enterprise customers. In Techaisle’s view, vSAN and EVO:RAIL are also relevant solutions for SMB customers looking to adopt hyper-converged infrastructure.

In 2014, VMware had announced integration between on-premise vSphere and VMware's own public cloud (vCloud Air) enabling businesses to migrate workloads to a VMware-based public cloud. In 2015, VMware extended the narrative to announce Unified Hybrid Cloud - built on SDDC and vSphere - to enable IT professionals run, build, deliver and secure any application, anytime and anywhere. Despite new offerings it is common knowledge that VMware still lags Amazon Web Services and Microsoft Azure in the public cloud market.

VMware is continuing its investment in network virtualization and in the future of NSX. It announced NSX 6.2 with added features such as inter vCenter NSX support, universal firewall rules and security groups, and Trace flow. Techaisle assumes a bigger game changer to be the integration between virtual and physical networks when VMware and partners such as HP complete the support of OVSDB in NSX to manage hardware virtual tunnel end-points (VTEPs).

Key market context

While enterprise market may be saturated, virtualization adoption within SMBs is far from over. Techaisle’s SMB & midmarket Server Virtualization adoption market trends study shows that US SMB server virtualization penetration has reached 54 percent (un-weighted), up from 41 percent two years ago. Within midmarket businesses the penetration has reached 88 percent and another 7 percent are planning adoption in the next year. Across the entire SMB community, there has been a 45% increase in off-premise virtualized servers in the past two years, an enormous shift that highlights the broader shift towards remote management of infrastructure resource. VMware has positioned itself to capitalize on the immense SMB opportunity, however, it needs to have a sales motion that is specifically targeting net new customers within SMBs rather than “mining” the installed base as in enterprises.

The real VMware SMB story is in EUC – enabling untethered mobility

The real story and opportunity for VMware, though, is in end-user computing.

Continue reading
  0 Comments

Dell-EMC deal – sense and sensibility or solid reasoning

On October 12 Dell took an enormous step along its new chosen path of reorienting away from a provider of low-cost PC and server hardware to a role as a more sophisticated supplier to businesses that view technology as a strategic asset rather than as a tactical necessity. Dell announced a “definitive agreement” to acquire EMC (including EMC’s ownership positions in VMware, RSA Security, Pivotal Software, Virtustream and other industry firms and joint ventures) for $67 billion – the largest-ever acquisition in the information technology industry. The deal was announced to analysts and media in a conference call that featured Dell Founder and CEO Michael Dell, EMC President/CEO/Chairman Joe Tucci and Silver Lake Partners Managing Partner and Managing Director Egon Durban, and included VMware CEO Pat Gelsinger, Dell CFO Thomas Sweet, and David Goulden, who acts as CEO for EMC’s Information Infrastructure business.

Two second Take

The acquisition greatly enhances Dell’s position in higher-margin, higher growth markets: storage is expanding faster than servers or PCs, and EMC is focused on the higher-margin software used for device management as opposed to the creation of physical devices themselves.

Revenue Synergies – the $67 billion question

While the call eschewed any commentary on staff redundancies between the two organizations, it focused its messaging on “revenue synergies that are three times larger than cost synergies,” a justification for the deal that comes primarily from new growth opportunities rather than from squeezing out costs through headcount reductions.

It can be assumed that most of this growth potential comes from expanded market rather than product positioning. In his remarks, Michael Dell noted that Dell/EMC (including VMware) have already established “leadership positions in storage, servers, virtualization and PCs,” and have strength in IT’s “most important growth vectors,” including software-defined data centers, hybrid cloud, converged infrastructure, mobility and security – and are “positioned as a leader in an amazing 22 Gartner Magic Quadrants.”

If Dell and EMC are already leaders in all of these large and/or expanding areas, then the question is where will further growth come from? It appears that the combined entity is banking on the benefits associated with increased customer account presence. In particular, Michael Dell noted that “as the data market moves to a compute-centric, converged model, Dell’s server franchise is a natural fit with EMC’s strength.” The theory appears to be that by combining EMC’s prowess at selling to enterprise accounts and Dell’s broader compute portfolio the company can increase share of wallet within major accounts; there is also some opportunity for using EMC to drive increased storage presence within Dell’s “growing commercial infrastructure franchise” in the SMB base, but this is likely to be a secondary consideration.

Security, Converged Infrastructure, Mobility, Big Data

Dell has been investing heavily in building a comprehensive security portfolio, assembling advanced threat identification services firm SecureWorks (acquired by Dell in 2011), firewall/unified threat management from vendor SonicWALL (acquired in 2012), backup software specialist AppAssure (2012) and identity monitoring and management software vendor Quest (also acquired in 2012), plus related capabilities sourced from thin client vendor Wyse (purchased by Dell in 2012) and from work done by Dell’s own engineering team. With the latest acquisition Dell adds encryption pioneer RSA Security (which became a division of EMC after being acquired in 2006) and enterprise mobility management supplier AirWatch (acquired by VMware in 2014), thus diversifying the portfolio even more. Dell has been positioning end-to-end security as a differentiating feature of its infrastructure portfolio for some time and with the acquisition Dell’s security story becomes even stronger, and even more distinct from the approaches of competitors like Lenovo, HP and Oracle.

Although it is tempting to look at a Dell/EMC/VMware combination as a means of consolidating a converged infrastructure offering capable of competing with the Cisco-led Vblock (Cisco, EMC, VMware) and FlexPod (Cisco, NetApp, VMware) offerings, it appears that Dell’s vision is broader and more strategic.

The acquisition also gives Dell a foothold into the big data deployment market opportunity where the enterprise spending is still hardware driven rather than software and analytics uptake.

And with AirWatch in the mix, Dell finally gets a mobility story in place beyond just the mobile devices.

Move to cloud

Michael Dell believes that “the combined company is very well positioned to address the move to the cloud,” both by providing infrastructure to public cloud providers and private cloud operators and through VMware’s ability to enable hybrid cloud. But in his remarks, he went further, observing that “I think what you’re seeing with the Software Defined Data Center is an ability to take the benefits of the public cloud and bring them into an on-premise data center.” He considers the complexities associated with connecting compute, network and storage as a major demand driver for public cloud, and virtualization and converged infrastructure as a means of delivering greater simplicity in on-premise environments, allowing firms to focus on optimizing for “the application user, quality of service and security.”

But Michael Dell is not satisfied by simply focusing on leveling the terrain between cloud and on-premise infrastructure, his vision is to supply infrastructure across different environments (public clouds, SaaS, hyperclouds, private clouds), providing common, connected and secure platforms to customers of all sizes, wherever their IT workloads reside.

Financial challenges

A lot has been said and written about financial challenges but due to the enormity of the deal size it is worth another read, from our point-of-view. The cost of debt may have an impact on the overall cost of operating the newly-expanded Dell entity. Dell was thought to have about $12 billion in debt prior to this deal; clearly, this figure will increase substantially after the acquisition. Michael Dell did state that observers could expect “a significant deleveraging” resulting from cost savings, increased revenue and cash flow management improvements that come with being a private company, but $67 billion represents a very high hurdle for these activities. Obtaining the funds themselves is not an issue but it seems likely that the costs associated with debt service may affect product prices and margins, and it is difficult to boost either in many of Dell’s core hardware markets. It might well be that asset sales become important to enhancing corporate profitability by reducing the cost base of the company.

Should debt reduction become a priority, the newly-expanded Dell would have a few options, starting with VMware. Although there was no mention of selling VMware as part of this deal – indeed, VMware CEO Pat Gelsinger was described as having a “very bright future” in the new organization – EMC’s 80 percent stake in VMware is worth more than $26 billion at current valuations. It will be very tempting to convert this equity into reduced debt to help the competitiveness of future hardware products, though this would be at the cost of an ownership position that (as per the terms of the Dell deal) accounts for 40 percent of EMC’s overall value. There are other avenues Dell could pursue – for example, it could combine its in-house security assets with RSA, and perhaps AirWatch, to create a stand-alone security business that could be monetized via issuance of public market shares – but a VMware sale is clearly the most direct means of raising capital to reduce debt.

Go-to-market challenges

An often-overlooked ingredient in a merger is the extent to which go-to-market staff and strategies can be melded in a single organization. This will likely be a significant issue for the expanded company. Dell and EMC customer-facing staffs have very different skills and compensation levels and may not be neatly amalgamated into a single sales force. The channel strategies of the two firms are different as well. Because EMC has focused primarily on large deals within large accounts and Dell has been more SMB (and consumer) focused, it may be that the sales staff and channel strategies can be aligned by sector but that will not erase the GTM discrepancies.

EMC sales staff work large, high margin deals, and are among the best compensated reps in the industry; Dell certainly cannot afford to reduce EMC-classic rep compensation (which would trigger a mass exodus to competitive startups) or to pay EMC rates to Dell-classic sales staff (which would consume more than 100 percent of current margins). From a channel and alliance perspective, EMC is a strategic partner to its enterprise-level services and software partners; Dell is primarily a tactical resource for SMB-focused VARs and integrators. These approaches target different partners with different programs and are delivered in different ways. Again, it is possible to align strategies by market sector, but many partners are likely to try to “shop” across programs to “Frankenstein” together blends of services and compensation structures that optimize the supplier benefits that they derive from the new Dell, and some – notably, Cisco, which is an EMC ally via Vblock – will find a Dell partnership untenable.

Final Take

While there are reasons to admire Dell’s strategy, it is very rare to find successful examples of a merger yielding a combined market presence that eclipses the individual positions of the firms involved. However, these are still early days, and the hard decisions will not be made until mid-2016, but there are still many operational issues to be ironed out between now and then. Even though Dell is not a public company, it will need to explain its expectations of “revenue synergies” to customers, analysts and the press, and Silver Lake will likely need to do the same for its current and potential investors.

There are reasons to both admire and to question the Dell/EMC deal. The answer to the $67 billion question will be found in the opportunities for “revenue synergies” that extend well beyond today’s converged infrastructure SKUs, and into the cloud and the core operating models of customers ranging from EMC’s traditional public sector and large enterprise accounts to Dell’s SMB buyers. If Dell can extend its reach across the full spectrum of IT/business infrastructure, it may build a position as the behemoth HP believed it would become, before it was bifurcated into two distinct business units. If it does not, it may more closely resemble Oracle, trying to assemble a coherent vision from a series of mismatched pieces.

The real winner though is Silver Lake. It has positioned itself as a central force within the technology industry, an unusual position for a private equity firm, and may signal that excellence in financing is joining excellence in inventing technology and excellence in technology marketing as paths to the industry’s pinnacle.

  0 Comments

Search Blogs

Find Research

SMB Data You Can Rely On | Analysis You Can Act Upon

Techaisle - TA