Dell’s VMware Spinoff: Future ‘Couldn’t Be Brighter' for Partners

DELL TECHNOLOGIES WORLD — CEO Michael Dell says spinning off VMware will drive growth opportunities for both companies and unlock significant value for stakeholders.

Dell and VMware execs spoke Wednesday at the Dell Technologies World virtual conference.

Dell’s 81% stake in VMware is valued at $52 billion, according to the Wall Street Journal, It plans to use the proceeds to pay down debt. The transaction should close in the fourth quarter of 2021.

Dell said VMware would pay a cash dividend of between $11.5 billion and $12 billion to shareholders. That includes $9.3 billion-$9.7 billion for Dell itself. Dell shareholders will get nearly one-half (44%) of one share of VMware for each share of Dell they own.

Dell’s Michael Dell

“What we’ve done is to create a commercial agreement. This is unique and differentiated and it allows flexibility for both companies,” explained the Dell Technologies CEO.

‘Full Steam Ahead’

Dell said the key message was that “nothing changes for at least the next five-and-a-half years.” He said product road maps, R&D, innovation, and sales and support all “move forward full steam ahead.”

“Everybody wants us to continue because it’s clearly worked very well. Around the themes of multicloud and edge, we have a great combined capability. We’re able to deliver consistent infrastructure and operations from the public cloud and private cloud to colos in the edge. Together, Dell Technologies and VMware are the multicloud platform for digital transformation.”

VMware’s Sanjay Poonen

Sanjay Poonen is COO, customer operations at VMware. He said that “as a standalone company, VMware will have more strategic and financial flexibility to pursue our ‘any app, any cloud, anywhere’ vision. The simplified corporate ownership structure and the governance model to support that really enhances our growth opportunities. As Michael pointed out, it’s a great thing for both companies and for our collective customers.”

Dell added that as chairman of both companies, he’ll “be working to ensure the partnership only continues to grow.”

Opportunities for Partners

Poonen said channel partners increasingly want to see jointly engineered solutions, delivered with services.

“We often have in common partners, VARs, distributors or SIs. Those partners want us to increasingly see these engineered solutions, delivered with services in this digital foundation for a multicloud world. So, the future couldn’t be brighter. I’m personally very excited about the solutions we have and the customer conversations we have jointly with Dell.

Dell’s Jeff Clarke

Meanwhile, Dell COO Jeff Clarke said the pipeline “is rich with future opportunities” for partners. He cited the vendor’s work in areas such as edge, 5G and the data center.

“Our teams are deeply engaged … on the next generation of technologies. There are equal – if not more – opportunities [for] partners going forward than we’ve demonstrated to date.”

Michael Dell also referenced Apex, its new as-a-service consumption model, which the company launched Wednesday.

“The next step is everything as a service,” Dell said. “It’s a whole new chapter for our company. We’ve had a history of reinventing the business, time and time again. This is just the latest version of that.”