Dell’s decision to acquire EMC has raised a lot of questions among fans of both companies, and there’s certainly a new competitive dynamic in play with the move. The most dramatic aspect of the deal might turn out to be the impact it has on the cloud, SDN, and NFV positioning of the combined company. Dell, like most industry players, has been a cautious advocate of open tools. VMware virtually demands that Dell rethink that open posture, and in particular how it might define “success” with NFV.
NFV, if it were to be optimally deployed, has the potential to generate over 100,000 new data center installations worldwide, and to consume well over ten million new servers. That would make NFV the largest single new application of data center technology, and make any data center equipment or software vendor who wasn’t in on the revolution into a second-rate player.
The challenge is that NFV’s business case has been difficult to make, not because there’s real questions on how it could be done but because doing all that’s required is complex and expensive both at the product development and the sales level. Since most of the largess spilled into the market by NFV success would fall into the arms of server vendors no matter how that success is generated, server vendors have to decide whether to try to push NFV as an ecosystem and develop the business case, or simply presume someone will and sit back to rake in the dough.
I was involved with Dell in the CloudNFV project, where Dell provided the hosting facilities and integration for CloudNFV. At one point, in the fall of 2013, it looked to many network operators in the NFV ISG like Dell was going to field an NFV solution based on CloudNFV. Dell did take over the leadership of the project when I bowed out as Chief Architect in January 2014, but nothing came of whatever hopes operators might have had for Dell’s entry as a full-scope NFV player. Dell seems to have decided that it would sell NFV Infrastructure to support any full solution that did emerge.
That approach might be difficult to sustain now. With VMware in house, Dell needs to find a role for VMware in NFV, which VMware itself has been working to do, in addition to making sure it gets server deals. At the simple level, that could mean nothing more than supporting a vision of the Virtual Infrastructure Manager (VIM) element of NFV that maintains independence from implementation specifics that currently tend to tie VIMs to OpenStack. Such a move would make VMware part of NFV Infrastructure, aligning the deal with Dell’s current position with servers. But that might not be enough.
You cannot make a business case for NFV through NFVI and VIMs alone. You need orchestration and management, and you need support for legacy infrastructure and for operations/management process orchestration as well as deployment orchestration. When Dell was supporting the OpenStack party line, they could presume that anyone who could do all the orchestration and management would pull through a general OpenStack solution, a solution Dell could sell to. Many have specific OpenStack commitments of their own, and Dell now has to be seen as representing another camp. Could they then have to build or acquire a complete NFV orchestration solution?
Up until fairly recently, that probably didn’t matter much. NFV has been more a media event than a real technology revolution. CFOs in the operator space have been griping about the lack of a business case for a year now, but if nobody had one then everyone was happy to ply the press with sound bites. Now, though, it’s clear that operators will start spending on NFV in 2016 and that will create some real winners, winners whose bottom line will be augmented by NFV’s transformation. Those winners will become NFV incumbents to beat. Dell, if they want to be among those being augmented, will have to make that business case too. And so far they can’t.
What could change that? The easiest approach for Dell would be M&A, given that Ciena has already embarked on an M&A-driven quest for an NFV business case. With their acquisition of Cyan, they updated their website to push all the right buttons for a complete NFV story. They say they’ve put an order of magnitude more engineering talent on the problem, too. So with Cyan off the table, what’s left for Dell?
The most obvious answer would be “Overture Networks”, who was one of the other players in CloudNFV and so is known to Dell. Overture has a complete NFV solution too; no need for a big engineering push. But while that would be a smart buy for Dell, I think evidence says they won’t make it. Why? Because if they wanted Overture the smart thing would have been to grab it before they did the EMC deal. Now there might be other contenders.
The less obvious answer is that Dell has no intention of buying anyone because they have no intention of being an NFV business case leader. Remember, Dell had that position in its grasp, as the most credible player in what was the first and leading NFV PoC. They could have taken CloudNFV on to commercialization and they didn’t. So why not presume that they wanted none of that management and orchestration business case stuff?
SDN, maybe? Remember that EMC/VMware got Nicira, the first credible SDN player. Now, of course, SDN seems locked in an open-source duel with Open Daylight on one side and ONOS on the other. How many articles have you seen on whether Nicira technology might supplant either? So SDN’s out too.
That leaves only two possibilities—Dell is doubling down on its NFVI-centric vision or it’s not even thinking about the service providers in the EMC deal—it’s about the enterprise. Both these possible drivers have arguments in their favor.
Dell could be looking at the open-source movement among operators, embodied in the OPNFV project, and thinking that the solution to the business case problem will be created in open-source software and thus could be applied to any vendor. There are two problems with this. First, OPNFV is a long way from delivering anything comprehensive enough to make the business case, and frankly I’m not sure it’s ever going to get there. Second, Dell would need to insure that all the decisions made in architecting the software were at least compatible with an implementation using VMware.
It’s hard to tell whether Dell or VMware know what steps they’d need to take to accomplish that. There is a movement within NFV to move to intent modeling at critical interfaces, but Dell has not led that movement or even been a particularly conspicuous supporter of it. Neither has VMware. Given that a lot of the structure of OPNFV is getting set in stone, it might be too late to do the critical compatibility stuff, and certainly there’s going to be plenty of time for competitors to drive their own initiatives with their own full NFV solutions. Remember, we have at least four vendors who have enough in place.
On the other hand, VMware virtualization is well established in the data center. The logical pathway for a VMware shop to the cloud is through VMware, whether that shop is an enterprise or an operator. VMware has its own vCloud approach, and an NFV activity that seems primarily directed at supporting NFV applications of vCloud in the carrier space. So Dell could have cloud evolution in mind, period, and might plan to exploit it more than drive it in both cases.
Which might not be as dumb as it sounds. The big problem both NFV and the cloud have is their reliance on open-source, which has a specialized revenue model for vendors to say the least. Who pays for buyer education when the result is open to all? Dell might realize that in the end both NFV and the cloud have to succeed by somebody selling servers to host stuff on. If Dell can bundle servers with VMware and vCloud and actually deliver what buyers want, will they care about open source or even standards? Yes if there’s an open/standard option on the table, but will there be?
In the end, though, Dell can probably win only if some key competitors dally at the starting gate. HP has everything needed for the cloud, SDN and NFV. Oracle has a lot of the stuff. IBM has some, as does Alcatel-Lucent. Red Hat and Intel/Wind River have powerful platform tools that could do what VMware does, and if they get a lot of good PR and are developed optimally, they could pose a challenge for Dell—do they embrace competitive software platforms to sell servers and undermine their VMware assets, or toss the opportunities these software platforms represent aside to protect their latest acquisition?
This is going to be a challenging time for Dell, for sure.
