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VCE, the coalition of Cisco, VMware and EMC, builds and sells Vblocks, which combine switches, servers, virtualization and storage into one package with management software that stretches across the ecosystem.
In my view, the decision to buy a Vblock isn't a hardware decision; it's a resource decision. Although you get a few racks of expensive equipment, what you are really purchasing is a professional services package. Someone has already done the work to integrate all of the storage, compute and networking pieces for you, even down to VCE the cables and performing assembly. So Vblock will exist as long as VCE can convince customers to pay for those professional services and put revenue on the bottom line.
That won't be a difficult sell for VCE as IT management gets deeper into building private clouds, which change internal funding models and make technology integration post-acquisition very difficult.
Building and operating a cloud management platform such as VMware vCloud, OpenStack or Hyper-V take so much project time and so many resources for implementation that few people have the time to argue over the details of a hardware system. VMware works on just about any hardware, so why waste time deciding which hardware is best? VCE's Vblock allows you to just pick something and get started with your cloud planning.
Plus, with Vblock you don't need a lot of equipment. I've been through the numbers, and 20 racks of converged hardware can easily run thousands of virtual machines. At this point, the difference between varying brands of server architecture and storage arrays is quite small.
In my last role, I was building an overlay network with an orchestration system. I found that I cared very little about what hardware was running the system. In fact, the entire hardware provided little value to the solution. Buying Vblocks was cheaper overall when factoring in design, purchasing and negotiation costs. What I appreciated most about Vblocks was that I didn't waste any time discussing storage, compute or network hardware. I spent a day picking out the stock-keeping units for the Vblock package, and then we got on with delivering network services.
So while VMware and Cisco might compete in the public market, VCE is a separate company, with professional services that provide the customer the ability to deploy VMware with the least possible hassle. Nothing about that has changed. VMware and Cisco have entered a new relationship where they compete in networking, but they'll still partner for cloud platforms. While that is new for Cisco and VMware, that isn't new in the industry. Move on, and now let's debate how SDN can change your operational issues.