EMC acquires VMware for US$635 million

EMC has entered into a definitive agreement to acquire VMware for approximately US$635 million in cash. The deal is will give the storage giant ownership of VMware's virtual server computing software.

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By  Matthew Southwell Published  December 17, 2003

EMC has entered into a definitive agreement to acquire VMware for approximately US$635 million in cash. The deal is expected to be complete early this quarter and although the company will be run as an EMC subsidiary, the storage giant will inherit VMware's virtual server computing software. This will help the storage giant flesh out its own storage virtualisation offerings to create single data pools that customers can deploy in heterogeneous IT infrastructures.

"Customers want help simplifying the management of their IT infrastructures. This is more than a storage challenge. Until now, server and storage virtualisation have existed as disparate entities. Today, EMC is accelerating the convergence of these two worlds," says Joe Tucci, EMC president & CEO.

"With the resources and commitment of EMC behind VMware's leading server virtualisation technologies and the partnerships that help bring these technologies to market, we look forward to a prosperous future together," he adds.

In addition to boosting its virtualisation offerings, the acquisition of VMware adds to EMC's rapidly expanding information lifecycle management (ILM) software story. In recent months, the vendor has also acquired Legato and Documentum. In fact, despite financial reports showing that EMC still earns 48% of its revenue from hardware and only 26% from software, the vendor now sees itself as a software player and argues that it continues to sell hardware only because no one else can match it for quality.

"We have many clients that use our software and not our hardware. The moment anyone can guarantee that they can make hardware of the quality we can, then it is my opinion that we will hand it [the hardware business] over to them," says Leo Miklas, regional country manager, EMC Austria.

"EMC is not really into hardware so much anymore and we carry on because no one else provides the same kind of quality... the shift is more towards the software and hardware doesn't have the dominating influence that it used to do," he adds.

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