EMC to Acquire VMware for $635M

Monday Dec 15th 2003 by Clint Boulton

Looking to bolster its virtualization capabilities, EMC moves to gobble up VMware in the storage giant's third blockbuster software deal since July.

Storage systems giant EMC Monday inked an agreement to acquire privately-held VMware for $635 million in cash.

The assets of the Palo Alto, Calif.-based company should help EMC's strategy to help customers lower costs and streamline operations by deploying virtualization technologies, which create one pool of storage and computing resources across a fragmented IT infrastructure.

VMware's software allows such operating systems as Microsoft Windows, Linux, and NetWare to run simultaneously and independently on the same Intel-based server or workstation, all while shuttling live applications across systems with no business disruption. This consolidates servers and pares server-provisioning time.

Buying VMware, the acknowledged leader in virtualization software for Intel-based servers, will further help EMC in its quest to become a leading storage software provider of "Virtual Information Infrastructure," in which IT workers configure and reconfigure computing and storage environments with no downtime according to changes in their business needs.

More broadly, the purchase would help EMC further its information lifecycle management (ILM) strategy for managing data from its creation until its disposal, a strategy that has become wildly popular among storage vendors in recent months. Rivals such as Hitachi Data Systems and VERITAS Software are in the midst of launching their own ILM products or strategies.

The deal is EMC's third acquisition bid for a large software company to meet its goal for ILM. The company announced its intentions to acquire Legato Systems and Documentum in July and October, respectively.

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

Should the deal close, EMC plans to operate VMware as a software subsidiary of EMC. It will remain headquartered in Palo Alto and led by Diane Greene, VMware's current President and CEO. The firm will remain focused on developing, selling, and servicing VMware's products and solutions.

EMC expects to take a charge of approximately $15 to $20 million in the first quarter of 2004 for the value of VMware's in-process research and development costs and other integration expenses. The acquisition is subject to closing conditions and regulatory approvals, and is expected to be completed early in early 2004.

Story courtesy of internetnews.com.

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