This analysis is spot on. I think the fundamental idea here is to use VMWare's excellent products as a gateway into the cloud. In theory, it should work out really well. But like you said, I'm rather skeptical that Dell can actually deliver great software.
The fundamentals of cloud services of any kind is that it is a service and that means well-defined continuous operational models with tons of software-defined and enforced methods. This is just not in the DNA of most of the large hardware vendors.