While many IT vendors will claim to have pioneered the converged systems market, VCE has truly become a marquee brand. From the beginning there have been expectations that VCE would eventually roll into one of its parent companies. While VCE’s business is well proven at this point, with greater than 50% annual revenue growth, prospective customers still have had concerns. In fact, ESG is aware of Fortune 500 customers that have been holding back multimillion-dollar commitments to VCE, due to the concerns stemming from ownership uncertainty.
This week’s announcement that VCE will be folded into EMC takes these client concerns off the table and makes sense as it matches up nicely with what EMC is already doing on a broader scale. Specifically, we think this announcement will be welcomed by current and prospective VCE customers, as it means:
- There is no longer any uncertainty about the ownership status of VCE, and customers can feel more confident in committing to a long-term VCE relationship backed by a strong owner.
- The timing and efficiency of new product innovation cycles will only improve as a result of a single owner structure with more streamlined transition from vision to technology-based execution.
- The long-range commitment to Cisco-branded technology in the VCE Vblock is sound, with a robust roadmap that includes assurances of leveraging both UCS and ACI as cornerstones moving forward.
Yes, of course, there will be some things that will have to be ironed out over time on a situational basis but in the end, this not-so-big surprise is simply the best way for VCE to meet the massive opportunity in the market and take the company to the next level by more quickly meeting client needs.