We are not yet in a world where cloud > local for the top 45% of Dell's most profitable customers (think big, very big). And if we ever get there, I don't think they will be looking to Dell/VM for a solution.
Those "whales" are going to want a more integrated solution, so Amazon, Google, and Msft will take their cloud services one step further--further away than Dell/VM will ever be able to take it: dedicated fiber for their largest customers. How? Any of these three can lour their existing client base as bait and cut a deal with the Verizon and ATTs of the world for bulk (dedicated) bandwidth purchases. And if they don't have enough existing clients (Azure) they can post a cash-bond guaranteeing revenues to the telecom (just like msft did with the record companies to sell music in Win8).
At any rate, when your borrowing cost is exponential, and you have no cloud business to speak of, you won't be able to take your services to that next level. I may end up eating my words here, but this is too little too late for Dell--the beginning of the end if you will.
This is not financial engineering, but rather Silverlake and EMC denying reality, or at least postponing it until they can each cash out.
> We are not yet in a world where cloud > local for the top 45% of Dell's most profitable customers (think big, very big). And if we ever get there, I don't think they will be looking to Dell/VM for a solution.
> Those "whales" are going to want a more integrated solution, so Amazon, Google, and Msft will take their cloud services one step further--further away than Dell/VM will ever be able to take it: dedicated fiber for their largest customers. How? Any of these three can lour their existing client base as bait and cut a deal with the Verizon and ATTs of the world for bulk (dedicated) bandwidth purchases. And if they don't have enough existing clients (Azure) they can post a cash-bond guaranteeing revenues to the telecom (just like msft did with the record companies to sell music in Win8).
You're kidding, right? Dell has provided the solutions for two of those three companies. The datacenter segment of their business is both successful and demolishing its only real competitor: a crumbling HP.
Dell's able to build and deliver ridiculously energy efficient datacenters at scale, very quickly. And they do, for Microsoft, eBay, and a number of other companies.
Their competitive advantage on the hardware side is substantial. Controlling VMWare would catapult the software side of things very, very far forward. If they want to build a new cloud platform, they've got extremely strong fundamentals to launch it from. If not, well, they'll probably power whoever does build it in some way (and profit handsomely).
Amazon provides Direct Connect which is in the same neighborhood of functionality as taking out dedicated fiber for their cash cow customers that happen to need a lot of bandwidth to their internal DCs.
I work for an entity that is evaluating Dell's cloud solution in theory and my previous comments on the viability of hardware makers going into cloud services are still unchanged.
We are not yet in a world where cloud > local for the top 45% of Dell's most profitable customers (think big, very big). And if we ever get there, I don't think they will be looking to Dell/VM for a solution.
Those "whales" are going to want a more integrated solution, so Amazon, Google, and Msft will take their cloud services one step further--further away than Dell/VM will ever be able to take it: dedicated fiber for their largest customers. How? Any of these three can lour their existing client base as bait and cut a deal with the Verizon and ATTs of the world for bulk (dedicated) bandwidth purchases. And if they don't have enough existing clients (Azure) they can post a cash-bond guaranteeing revenues to the telecom (just like msft did with the record companies to sell music in Win8).
At any rate, when your borrowing cost is exponential, and you have no cloud business to speak of, you won't be able to take your services to that next level. I may end up eating my words here, but this is too little too late for Dell--the beginning of the end if you will.
This is not financial engineering, but rather Silverlake and EMC denying reality, or at least postponing it until they can each cash out.