Lenovo claims Dell has run off the VxRails and can’t sell hyperconverged VMware

Lenovo has claimed that Dell’s breakup with VMware by Broadcom goes deep – so deep that Virtzilla’s ex-owner is currently unable to sell jointly engineered systems.

When Dell owned VMware, the two were seemingly inseparable. Michael Dell would often say VMware was the future of hybrid cloud and therefore of enterprise computing, and Dell the company backed that up by creating VxRail – a jointly engineered hyperconverged appliance that took the best of VMware and bundled it into ready-to-roll hardware to suit mid-market customers and bigger orgs that liked the idea of scale-out infrastructure.

Dell’s competitors sometimes grumbled that they couldn’t match VxRail because VMware and Dell were so close.

After Broadcom acquired VMware, Dell ended its distribution deal with the by-then-Broadcom business unit.

Now, Lenovo sources who worked on VMware’s hyperconverged software stack have told The Register that Dell is out of the game – for two reasons.

One is that it’s yet to sign a new agreement with Broadcom, meaning it can’t currently resell VMware software bundled with VxRail appliances. Given that the whole point of VxRail is integration of Dell hardware and VMware’s products, that’s a problem.

The other pertains to recent changes in the orchestration code Broadcom requires to be installed in hyperconverged systems. Our Lenovo sources told us Dell’s VxRail doesn’t meet current requirements – but that its own hyperconverged systems do.

It’s not uncommon for vendors to deliver a little scuttlebutt that paints their rivals in a bad light, which is why The Register always attempts to verify such claims. In this case, we asked Dell to comment on the two points alleged by Lenovo: licensing and software.

The PC vendor sent us the following statement in reply:

That’s not vastly different to the statement Dell offered when it decided not to renew its distribution deal with Broadcom. The first sentence is verbatim, and the second was “We will continue to evolve our relationship with Broadcom to deliver value to our business and our customers and partners.”

But Dell wouldn’t offer anything more.

We asked Broadcom if it has a deal with Dell, or has changed the requirements for hyperconverged appliances. We were told the acquisitive org has “nothing new to share at this stage.”

So what’s going on? Since acquiring VMware, Broadcom only sells four bundles of VMware products. Perhaps Broadcom’s square-shaped bundles don’t fit into the round VxRail hole? Or perhaps Broadcom’s pricing – which it says can be less than VMware’s but which users say is considerably higher – is a problem?

Meanwhile, at Nutanix …

VxRail was arguably created to counter Nutanix, which pioneered the hyperconverged infrastructure market by combining compute, storage and networking in a single appliance and software stack. And as it happens, Nutanix on Wednesday announced its Q3 2024 results. Revenue grew 17 percent year-over-year to $524.6 million, but the biz returned to loss with an $11.6 million deficit.

It lifted its guidance for Annual Contract Value billings and cashflow, but did not increase overall revenue guidance.

Nutanix last week told The Register it thinks the times suit the business. Between Broadcom giving VMware customers many reasons to consider alternatives, the AI boom, and Nutanix’s increasing investment in cloud-native offerings, execs told us they see higher interest in its offerings than ever before.

Yet after the results announcement, Nutanix’s share price sank from over $73 to around $65.50 in after the bell trading.

Rajiv Ramaswami, Nutanix president and CEO, told The Register that the new deals his company is chasing are sometimes taking longer to land. He claimed the company won an eight-figure deal with a Fortune 50 financial services company, but it took two years to secure – and then turned out to be bigger than first forecast.

“Because of this dynamic our own internal projections for new business are at a slower pace,” he lamented, admitting that Nutanix is “behind in terms of topline of new business.”

Ramaswami also observed that Broadcom is showing a willingness “to be nimble and make changes. We see them being quite aggressive in the field when challenged.” ®