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December 4, 2012

VMware, EMC Spinoff Resurfaces

Tiffany Trader

VMware and EMC spinoff rumors, which came to light back in July, are now official. Earlier today, Terry Anderson, VP of Global Corporate Communications at VMware published a blog entry announcing that the companies’ non-core cloud assets would be combined as part of the newly formed Pivotal Initiative.

“VMware and EMC are committing key existing technology, people and programs from both companies focused on Big Data and Cloud Application Platforms under one virtual organization – the Pivotal Initiative,” writes Anderson.

The new organization will include “most employees and resources currently working within EMC’s Greenplum and Pivotal Labs organizations, VMware’s vFabric (including Spring and Gemfire), Cloud Foundry and Cetas organizations as well as related efforts.”

All told, approximately 600 employees from VMware and 800 employees from EMC will make the switch.

The new subsidiary will be led by Paul Maritz, Chief Strategy Officer for EMC, and former CEO of VMware. The companies expect to formalize the union by mid-2012, subject to regulations.

The companies’ decision to create one uber-focused cloud and big data play speaks to the growing cloud market and the dominance of Amazon and first-run competitors, Google and Microsoft. All three vendors have doubled down on their cloud commitments in recent months; and on the open source side, there’s a bevy of OpenStack (and CloudStack) based offerings chomping at their respective bits, as well.

The move will allow VMware to focus on its primary business, server virtualization and software-defined networking and could give EMC greater leverage on the cloud storage front. All in all, it’s a good move, but will require expert direction and management to pull off.