EMC And VMware To Fold Products Into New Cloud Entity

EMC and VMware are to merge their respective overlapping product divisions into a new single division, focused on cloud computing and big data.

The new entity, to be known as the ‘Pivotal Initiative’, takes certain product elements from both VMware, and its owner EMC, and combine them under the leadership of former VMware CEO Paul Maritz, who is currently the chief strategy officer at EMC.

The companies expect to formally unite these differing resources within its new virtual structure by Q2 2013.

Pivotal initiative

From the VMware side, it seems its Cloud Foundry platform-as-a-service offering, as well as VMware’s vFabric (including its spring portfolio for Java developers plus its GemFire data management software), and VMware’s Cetas big data analytics division, will end up in the new Pivotal Initiative.

From EMC, the new venture will take its Big Data and analytics portfolio, such as its recently-acquired Greenplum portfolio, as well as its Pivotal Labs organisation, which offers software development tools and services.

EMC revealed the initiative will impact approximately 600 employees from VMware and 800 employees from EMC, with staff moving over the new entity. There was no news of possible layoffs.

Why is this move taking place? It seems that competition from a growing number of rivals could be playing its part, coupled with the need for a possible product reorganisation following numerous acquisitions.

“We are experiencing a major change in the wide scale move to cloud computing, which includes both infrastructural transformation and transformation of how applications will be built and used based on cloud, mobility and big data,” blogged Terry Anderson, VMware’s VP of global corporate communications.

“There is a significant opportunity for both VMware and EMC to provide thought and technology leadership, not only at the infrastructure level, but across the rapidly growing and fast-moving application development and big data markets.

“Aligning these resources is the best way for the combined companies to leverage this transformational period, and drive more quickly towards the rising opportunities.”

Both EMC and VMware said they would provide updates on this initiative in the first quarter of next year.

Unit Spin-Off?

The move could eventually result in the spinning out of the Pivotal Initiative as a separate or even standalone entity.

“This is a very good move,” Kaushik Roy, an EMC specialist who is a principal with Hercules Technology Growth Capital, was quoted as saying by Reuters.

“Both companies have applications that are overlapping,” Roy said, adding that “if things go well they may spin it off”.

“This realignment should enable EMC to position itself more as a cloud enabler while VMware can concentrate on its expanded strategy of the software-defined data centre,” Alkesh Shah, an analyst at Buckingham Research Group was quoted as saying.

Shah believes the companies could decide on a partial spin-out of the unit in 2014/2015.

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