For EMC, $1.2B Virtustream Acquisition Worth Every Penny in IaaS Cloud Race

Joe Tucci and his team at EMC have done it once again! The company just announced a virtustreamemclogodefinitive agreement to acquire Virtustream for $1.2B and form a new business unit to offer Managed Cloud Services. Gartner recently selected Virtustream as a niche cloud Infrastructure as a Service (IaaS) provider in their 2015 Magic Quadrant for IaaS. VCloudNews analysed the Gartner MQ and interestingly made the observation that Virtustream and another niche cloud provider Joyent could be attractive to IT companies looking for new technology or ways to grow their cloud business. EMC has been struggling to find its spot as a major cloud services provider in a complex market. The price tag of this acquisition may seem high but it really isn’t as this move gives EMC a strong chance of competing with cloud providers such as Amazon, Microsoft, Google and IBM.

EMC has placed multiple bets in cloud and infrastructure based technologies:

  • For IaaS, VMWare, an EMC company offers hybrid cloud products and services  i.e. VMware vSphere, vCloud Suite as well as VMware hosted vCloud Air. VMware also announced OpenStack integration which enable OpenStack customers to connect to VMware hosted vCloud Air based cloud infrastructure.
  • Pivotal, another EMC company offers Cloud Foundry based Platform as a Service (PaaS) which allows developers to write applications that can easily run on multiple clouds including vCloud Air based cloud.
  • As a pure infrastructure provider for private cloud, besides EMC’s broad storage portfolio, VCE, an EMC company offers converged and hyper-converged infrastructure building blocks that can run VMware stack and offer a scalabale cloud IaaS solution to customers. EMC also acquired other infrastructure assets e.g. Software Defined Networking (SDN) player Nicira and cloud storage companies such as Spanning and Maginatics to get ready for a bigger cloud play.

Virtustream which will expand EMC’s cloud offerings has already been in the news for partnering with EMC. Besides supporting VCE vBlock, the company announced earlier this year it is offering an EMC-Powered Cloud Service option as part of its enterprise class cloud IaaS utilizing EMC VMAX for on-demand storage for mission-critical SAP workloads. Virtustream’s xStream software and its underlying Micro-VM (µVM) technology together with EMC storage solutions can enable enterprises to enjoy consumption-based pricing, while receiving top-tier SLAs and improving the overall performance of mission-critical applications such as SAP. As a result, customers are able to move any production and mission-critical enterprise applications to the cloud and combine on-site and cloud-based operations as required. Virtustream already features customers such as The Coca-Cola Company, Domino Sugar, Heinz, Hess Corporation, Kawasaki etc.

“Virtustream is an exceptional company and this is a critical and transformative acquisition for EMC in one of the industry’s fastest-growing and most important sectors,” said Joe Tucci. “With Virtustream in place, EMC will be uniquely positioned as a single source for our customers’ entire hybrid cloud infrastructure and services needs. We could not be more delighted that Virtustream will be joining the EMC Federation family. It’s a game changer.”

As per EMC’s announcement, Virtustream’s cloud software and Infrastructure-as-a-Service portfolio will be delivered directly to customers and through partners. EMC Federation service provider partners will receive access to Virtustream’s xStream cloud management software platform and be enabled to adopt and deliver their own branded services based upon it. Post acquisition, Virtustream CEO Rodney Rogers will report to Joe Tucci, EMC Chairman and CEO.

Nice move by EMC and congratulations to both companies!

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One comment

  • John J. Williams

    Thanks for great article that reflects important side of M&A! Indeed, not all the mergers or acquisitions come to finish with good results. I think that the reason could be in due diligence. It’s is known that the process itself is time-consuming and paper-intensive so some quantity of mistakes are possible there. I have recently known that Ideals data room
    can be used for this purpose. It make it easier and faster to do.

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