When product ownership changes from one vendor to another – as in a company or technology acquisition -- channel partners might hope for business as usual following the transaction, but that's not always the case. With Wednesday's news that VCE will become an EMC business, there's a good chance it will be the case. In fact, partners could benefit from the shift in ownership, observers say.
The fact that partners weren't feeling the love between EMC, VMware and Cisco was brought out of the shadows earlier this year. In May, Cisco and EMC rolled out the Cloud Infrastructure Solutions Accelerator program, which specifically targeted VCE solutions and helping partners sell and profit in the cloud infrastructure market. At that time, Thatcher Alexander, president of Alexander Open Systems (AOS), a systems integrator based in Overland Park, Kan., told SearchITChannel that the launch of the new program was good news to partners because there had been a feeling of stress between EMC, Cisco and VMware and the program announcement reinforced a united front among the vendors.
But now VCE will soon become an EMC business -- with Cisco retaining a 10% stake in VCE, down from 35% -- Cisco will essentially be let loose from coalition.
"This isn't a big breakup of the coalition," said Diane Krakora, CEO of PartnerPath, noting the relationship between EMC and VMware: EMC bought VMware in 2004 and offered public shares of VMware in 2007; EMC still owns about 80% of VMware. "Cisco is still part of the VCE solution; they're just not funding it in the same way, and for Cisco, that's a good thing. Cisco needs to create products and a value proposition for their own customers," she added.
According to a report published by Stifel, an investment banking firm, Cisco decreased its VCE investment to $10 million in the quarter that ended last April compared with $91 million in the previous quarter.
EMC also said that VCE partners (and customers) can feel confident in their choice of Vblock Systems as a long-term foundation for their data center infrastructures and can continue to expect the same pre- and post-sales engagement model with VCE.
Cisco said that the VCE Partner Program remains unchanged and that there will be no impact on Cisco partners. The VCE go-to-market model and the way EMC, Cisco and VMware work with customers and partners remains unchanged.
And EMC and Cisco say that the Cloud Infrastructure Solutions Accelerator program will remain unchanged.
Paul Edwards, IDC's director of infrastructure channels research, said that it makes more sense for VCE to be owned by one company, EMC in particular. "They already have experience running independent companies that together roll up into a larger one," he said. EMC's independently operated companies include VMware, Pivotal and EMC Information Infrastructure (EMC II). (EMC II is the main storage group within EMC federated group of companies.)
Edwards also said that many VCE partners are also EMC partners and the move to bring VCE into EMC shouldn't cause disruption for partners, especially if VCE is run independently.
Krakora believes that like any EMC company, VCE will likely operate independently like any other "real company" and be able to create its own programs and not be reliant on a coalition. The autonomy will be good for partners, she said.
On Wednesday, VCE CEO Praveen Akkiraju confirmed that VCE will operate as an independent entity within EMC with its own sales force that includes the company’s channel sales team and also with its own channel program.
At EMC's Global Partner Summit 2014 in May, the vendor made extensive changes to its partner program and introduced the EMC Business Partner Program, scheduled to go live in January 2015.
Considered a major redesign, the new program unifies all of the company's partner programs under a single umbrella. Additionally, EMC partners in partner programs with its "federated companies" will be able to accumulate more benefits. When the program goes live in January, EMC partners will also be able to share training credentials or competencies across programs, and partners who go deep in federated solutions will be able to get additional rewards.