VMware Bails On Virtustream Cloud Venture

VMware has walked away from agreement with EMC to form a joint venture with Virtustream, the cloud business EMC acquired in May of this year.

The initial agreement was struck after October’s $67 billion Dell-EMC merger, but now VMware has decided the Virtustream venture won’t be going ahead.

EMC and VMware announced the proposed company, which would have carried the Virtustream brand, on October 20 during the releases of their respective quarterly earnings.

The new business would have been added to the list of companies, which include VMware, RSA, VCE and Pivotal, that make up EMC’s federation. EMC and VMware would each have owned a 50 percent share of Virtustream.

Shares

Whilst not yet giving a reason for the bail, VMware has suffered a 25 percent decline in share value over the last two months. This decline could well be pinned on the Virtustream joint venture announcement.

VMware told investors of the news via this regulatory filing yesterday.

EMC boss Joe Tucci said in a statement that “through Virtustream, we are addressing the changes in buying patterns and IT cloud operation models that we are seeing in the market. Our customers consistently tell us that they are focused on their IT transformations and journeys to the hybrid cloud. The EMC Federation is now positioned as a complete provider of hybrid cloud offerings.”

But EMC now says, despite VMware’s bailing, that it is still committed to Virtustream.

“EMC is 100% committed to Virtustream, which represents our fastest-growing Federation entity and continues as the focal point of EMC’s mission-critical, enterprise-class cloud strategy. Virtustream will stay tightly aligned to VMware through the Federation partner model,” EMC told TechCrunch.

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