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What does the Dell-EMC deal mean for vWorkspace?

Dell's acquisition of EMC will also make it the largest stakeholder in desktop virtualization leader VMware. So what happens to Dell vWorkspace, the company's own VDI platform?

The announcement that Dell is buying EMC, and therefore VMware, has the desktop virtualization community wondering about the future of Dell's vWorkspace product for VDI.

Dell acquired vWorkspace when it purchased Quest Software for $2.4 billion in 2012. Back then, the future of vWorkspace was up in the air because Dell had -- and for the time being, continues to have --extremely valuable partnerships with Citrix and VMware.

I love vWorkspace and believe it is a top-tier VDI platform, but it has always ranked a distant third place behind Citrix XenApp/XenDesktop and VMware Horizon View in terms of mind share. I hoped that Dell would try to change that, but it understandably chose to protect its lucrative partnerships instead, which relegated vWorkspace to existing customers and customers that explicitly asked for it.

Lately, Dell has been a bit more aggressive about marketing vWorkspace without crossing the line to full-on competition with its strategic partners. Dell doesn't bluntly telling Citrix and VMware customers to move to vWorkspace, but if a customer is thinking about switching VDI platforms, it will offer up vWorkspace as an option. Dell also focuses on customers that want to simplify their installation and ongoing VDI management, directing a lot of effort into streamlining its configuration processes and tightening up the company's relationship with Microsoft and its Hyper-V hypervisor.

Just as vWorkspace took a few steps forward, it's also getting knocked back by the Dell-EMC deal.

This is all good news for the desktop virtualization industry, which could use a bit of stirring up. Dell vWorkspace seemed to be on a good trajectory, but then news of the Dell-EMC deal landed. Dell is purchasing EMC and its 80% share of VMware for $67 billion, but they won't finalize the deal until the middle of 2016 at the earliest. The remaining 20% of VMware is publicly traded, and to raise money for the acquisition, Dell will sell off an additional 53% more of VMware stock to the public. That leaves Dell with a 27% share of VMware, which will still make it the company's largest shareholder.

You see where this is going. Currently, Dell owns 100% of vWorkspace, which is an excellent but under-the-radar desktop virtualization platform based on Microsoft Hyper-V. Come the middle of next year, Dell will also own 27% of VMware Horizon, an excellent, extremely well-known VDI platform. Don't forget that Dell will also hold a 27% stake in VMware vSphere, which generates its own desktop virtualization-related revenue (and is the sworn enemy of Microsoft).

So, can the two coexist?

Dell vWorkspace in a standoff

On one hand, it's hard to believe that Dell can continue business as usual with vWorkspace and Microsoft while also owning a more valuable, if not superior product based on a Microsoft competitor. Dell vWorkspace's strained existence in the company's ecosystem can only bear so much, so this might be the straw that breaks the camel's back.

Then again, this deal is different from almost every other acquisition we've seen in the VDI area for one simple reason: Dell isn't going to absorb VMware. Dell will own a significant stake in VMware, though not as big as the one EMC currently has. VMware runs as a separate entity with 80% ownership by EMC, so you'd think that independence would only grow when Dell takes over and sells off more shares.

With that in mind, the relationship between VMware and Dell will probably not differ much from the way it works today. Dell has a partnership with VMware that rewards it for selling products that tie into VMware's products. Dell sales reps can create deals that incorporate vSphere and Horizon View, or they can create deals for customers that prefer Hyper-V and vWorkspace.

The future of vWorkspace is probably tied up in just how much money Dell makes on one product versus the other. Does selling a vWorkspace VDI package bring in more revenue than 27% of the value of a VMware Horizon/vSphere deal? Plus, in the nine months between now and when the acquisition closes, how many people are going to have the confidence to buy into vWorkspace? I don't want to give the impression that Dell will decide about the future of vWorkspace on Day 1, but it's important to note that just as vWorkspace took a few steps forward, it's also getting knocked back by the Dell-EMC deal.

The good news is that you can expect business as usual for the next nine months, but it will be interesting to see how things shake out, not just with vWorkspace, but with Dell's relationship with Microsoft and what happens to Citrix. Just a few weeks ago, there were rumors that Dell was interested in buying Citrix. Buckle up, because this will be a wild ride.

Next Steps

How Dell's EMC acquisition affects VMware and Citrix

Brian Madden's analysis of the Dell-EMC deal

How vWorkspace compares to its VDI competitors

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