Dell Technologies, Microsoft, and VMware Just Became Very Big Cloud Partners
The partnership, announced Monday against the background of Dell’s annual user conference in Las Vegas, lets Microsoft’s Azure cloud computing customers use VMware’s virtualization software to manage their IT operations in Azure.
It’s similar to a deal in 2016 that let Amazon Web Services customers use VMware’s software. The deals are intended to address the trend of companies using multiple cloud services as well as internal data centers for their corporate infrastructure, rather than one outside vendor. In industry lingo, this mixed setup is known as a “hybrid cloud.”
In theory, customers will benefit from the partnership announced Monday because it eliminates some of the extra coding required by using multiple services. Because companies are increasingly using products from multiple companies, many enterprise tech companies are increasingly making their products more compatible with rival services out of concern that they could lose sales.
Executives involved in the deal told Fortune that they have been talking for years about deepening a pre-existing partnership between Microsoft and Dell that was previously less focused on VMware’s role and more on personal computers and the Windows operating service. Those talks became more serious a few months ago, they said.
The latest deal involves VMware, in which Dell owns a majority stake. Tech publication The Information reported in February that Microsoft and VMware were exploring a cloud partnership.
In 2017, Microsoft created a non-VMware sanctioned product that customers could use to run VMware’s virtualization software in Azure. VMware later publicly criticized the product, citing alleged technical limitations resulting from a lack of VMware’s involvement with the product’s development.
Scott Guthrie, Microsoft’s executive vice president of its cloud computing unit, did not directly comment about that dispute. But in describing the latest truce, he said that “there’s been a wide variety of both technical and support discussions that we obviously needed to have in order to make this happen.”
“It’s been a journey, but I think a journey that has ended up in a fantastic space,” Guthrie said.
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VMware CEO Pat Gelsinger explained that VMware’s customers increasingly use Azure, and that it therefore made sense for VMware to work with Microsoft to make their technologies more compatible.
“Simply put, customers are asking us to do more together,” Gelsinger said.
VMware once offered customers its own cloud computing service, but eventually sold it to European tech company OVH in 2017 after it failed to gain any significant market share.
Matt Eastwood, a senior vice president at research firm International Data Corporation, told Fortune in an email that VMware has been looking to partner with more cloud computing vendors over the past few years.
“As cloud has matured it has become increasingly clear that enterprise customers want multi-cloud (aka choice),” Eastwood said. “Microsoft saw this strategy was working for VMware and saw less reason not to partner. In the end it was just a matter of timing.”
Also as part of the Dell and Microsoft partnership, Dell created a product that lets corporate IT managers more easily set up employee computers with Microsoft Windows. Another new VMware service, available later this year, works with Microsoft’s Office 365 tools and Active Directory product that helps IT staff manage the devices and software that employees can access. Another new service involving Microsoft’s Windows Virtual Desktop product also will be available later this year via a test version.
A Dell spokesperson said that the Azure and VMware services are now available in the U.S. and will expand to other areas in the coming months. The companies did not say how much the new services will cost.
Whatever the case, Guthrie said that the expanded partnership “is not just about what we do on Monday.” Instead, it’s intended to signal to customers that the once-rival companies are cooperating more than they ever have and that more is coming.
In fact, in describing the partnership, Guthrie made it sound like a romance, saying it “has really brought us together on a deeper level than we ever had.”