Dell plans to spin-off its VMware business will likely net Dell at around $9bn, which it can use to pay down debt or go on an acquisition spree. Beyond the obvious need to reduce its debt, VMware (which still had its own stock) and Dell will both have higher values when they are evaluated as separate entities, says GlobalData, a leading data and analytics company.

Dell currently owns 81% of VMware, which it gained during its acquisition of EMC in 2015. Michael Dell will remain chairman of the board for both companies.

Steve Shuchart, Principal Analyst at GlobalData, comments: “As part of the deal, Dell and VMware have signed a five-year commercial contract where they will still work closely together on technology development, sales, and marketing. That’s not great news in terms of keeping VMware from becoming too Dell-centric, but the reality is that VMware, as an independent company, should be free to pursue other deals and relationships with rival hardware vendors.

“The new arrangement may also help Dell avoid potential friction with partners which offer alternative data center platforms to that of VMware, notably Microsoft, Red Hat, and Nutanix. Of course, a lot of this hinges on leadership at VMware, which is searching for a new CEO. With Michael Dell no doubt involved in the search, it’s not outside the realm of imagination to assume that the new CEO will be Dell-friendly.”

The advice for enterprise buyers is easy to follow: proceed as normal. This deal will result in no real changes in the short term as Dell and VMware are still working closely together.

Chris Drake, Principal Analysts at GlobalData, comments: “The long-term prospects for VMware remaining hardware-agnostic have improved. Of course, there may be changes when VMware selects a new CEO; that individual will no doubt put their stamp on the company. VMware customers should not be particularly worried about their investment in VMware; there is actually cause for optimism, as VMware will be able to pursue new opportunities as an independent company.

“The five-year agreement between VMware and Dell for technology, marketing, and sales isn’t great news for rival vendors, but there are some upsides. VMware, once it is fully independent and has a new CEO, should be more open to deeper partnerships with other enterprise IT vendors. Rivals to Dell can pursue deeper cooperation and while it is unlikely they will get a deal as sweet as the one Dell created for itself, there will be better opportunities to partner with VMware, but, for right now, it’s business as usual.”