EMC Corp. has decided against spinning off VMware Inc., according to a published report. One potential reason why: VMware is the linchpin to EMC's software defined data center (SDDC) strategy.
decided against spinning off its majority stake in VMware after reviewing the idea over the last several months following pressure from activist investor Elliott Management Corp, three sources close to the matter told Reuters.
Analysts have said EMC currently trades at a discount to storage rivals such as NetApp Inc., and that a VMware spinoff could help it unlock value under the right circumstances, Reuters reported.
But much like IBM Corp. under Lou Gerstner's leadership in the 1990s, EMC CEO Joe Tucci apparently sees strength in product and service diversity -- rather than quick fixes from spinoffs.
Race to Software-Defined Data Centers (SDDCs)
Tucci, like several CEOs representing enterprise IT companies, sees plenty of data center convergence on the horizon. First, VMware virtualized servers. Now, virtualization software is expanding to storage and network systems. The result could be software-defined data centers (SDDC) -- where one set of software tools manage network, storage and server infrastructure.
So far, much of the showdown involves VMware's NSX technology vs. Cisco's ACI (Application Centric Infrastructure). And while it's early in the SDDC race, Tucci is managing several other mission-critical moving parts within and around the EMC portfolio. They include RSA Security and Pivotal -- the cloud-centric startup focused on big data.
Pivotal ultimately is a joint venture between EMC and VMware. Together, the trio hopes to define how big data applications and storage systems scale across software-defined data centers. That overarching goal could explain why EMC has decided against spinning off VMware -- at least according to today's published reports.
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