Will 'Collateral Damage' Destroy VMware-Cisco Relationship?

NEWS ANALYSIS: The relationship between VMware and Cisco Systems is extremely important for numerous companies that run VMware software on Cisco hardware.

SAN FRANCISCO--As the larger IT companies become less specialized and more all-purpose in nature, collateral damage to industry partners is becoming a much more common--and serious--business issue.

A prime example a few years ago involved storage giant EMC and PC/server maker Dell. Dell, which didn't focus on storage early in its existence, was happy to resell EMC's wares to its midrange and SMB customer base alongside its servers.

At the same time, EMC needed help selling to midrange and smaller companies. Then, after Michael Dell took back his CEO job in 2007, Dell bought up-and-coming storage makers Equallogic (in 2007) and Compellent (2010), and suddenly the relationship changed: Dell was now competing with EMC and was hardly interested in reselling anybody's storage anymore.

EMC then bought Data Domain in 2009 and Isilon in 2010, expanding its own storage line. A previously profitable 10-year agreement fell into pieces, and now you can bet Dell and EMC speak to each other only when they absolutely must.

HP, 3Com Deal Was a Key Event for Cisco

Same thing happened when Cisco went into the server-making business in 2009 with its UCS; Hewlett-Packard was miffed at that formidable new competition from a former partner. A year later, HP acquired Ethernet networker 3Com, which brought HP networking products and expertise that it used to get from Cisco Systems. We're told Cisco's still steamed about that one.

This pattern happens all the time, and now here we go again. VMware is using its virtualization power base (an estimated 90-plus percent of all data centers use some form of VMware software) to move deeper into the networking domain dominated by one of its major partners. That partner is--you've guessed it--Cisco Systems.

The relationship between VMware and Cisco Systems is an important consideration for the large number of companies that run VMware's hypervisors and other management software on Cisco's data center servers and networking hardware. It is even more important for larger enterprises that run both VMware and Cisco networking software.

At some point, all these IT shops will have to make strategic buying decisions about which software to maintain, and redundancies don't cut it. Enterprises only need one network. This will all get pretty tangled, even political, and acrimony between these two vendors and their sales reps will not help matters.

VCE Partnership Is Another Sensitive Area

We're not even talking about the two companies' mutual interest and founding investments in VCE, maker of the hot-selling VBlock converged data center systems. That's another touchy topic.

Well-informed industry folks were talking to eWEEK at VMworld about how they expect VMware and Cisco to gradually fall away from each other, how they will stop trying to sell each other's wares into deals big and small, and how customers caught in the middle might be affected in the long and short runs.

Go here to read Jeff Burt's article about how VMware's new products and partnerships may affect its relationship with Cisco.

eWEEK asked VMware CEO Pat Gelsinger on Aug. 27 how his company's evolving partnership with Cisco has become more complicated, specifically in view of VMware's unveiling of the NSX virtual networking platform that has just been launched.

NSX is a significant addition to VMware's software-defined data center strategy, in which all data center components—from servers to storage to networking—are virtualized. Most of its features compete directly with Cisco's older network virtualization software.

Gelsinger, as one might expect, took the high road. Nonetheless, there was a hint of concern between his carefully chosen lines.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...