EMC and VMware Reveal New Cloud Services Business

VMware and EMC to Jointly Own Fast-Growing Virtustream Cloud Services Business; Together to Offer the Industry’s Most Comprehensive Hybrid Cloud Portfolio

Story Highlights:
 

• EMC and VMware  plan to form new cloud services business creating the industry’s most comprehensive hybrid cloud portfolio
• Will incorporate and align cloud capabilities of EMC Information Infrastructure, Virtustream and VMware to provide the complete spectrum of on- and off-premises cloud offerings
• The new cloud services business will be jointly owned 50:50 by VMware and EMC and will operate under the Virtustream brand led by CEO Rodney Rogers
• Virtustream’s financial results to be consolidated into VMware financial statements beginning in Q1 2016
• Virtustream is expected to generate multiple hundreds of millions of dollars in recurring revenue in 2016, focused on enterprise-centric cloud services, with an outlook to grow to a multi-billion business over the next several years
• VMware will establish a Cloud Provider Software business unit incorporating existing VMware cloud management offerings and Virtustream's software assets -- including the xStream cloud management platform and others
• VMware will host a conference call today at 2:00 p.m. PT/ 5:00 p.m. ET to review financial results and business outlook. A live web broadcast of the event will be available on the VMware investor relations website at http://ir.vmware.com.
• EMC will host a live webcast for investors tomorrow at 8:30 a.m. to discuss third-quarter financial results.
• The webcast can be accessed from the EMC Investor Relations website (http://www.emc.com/ir).

 
Full Story:
 
HOPKINTON, Mass. and PALO ALTO, Calif. – October 20, 2015 – EMC Corporation (NYSE:EMC)  and VMware (NYSE:VMW) today announced  plans to form the Federation’s new cloud services business by combining their respective cloud capabilities, along with existing Virtustream cloud offerings, under the Virtustream brand. Virtustream will be jointly owned by VMware and EMC and led by Rodney Rogers, CEO of Virtustream. The parties are finalizing a definitive agreement for the transaction. Virtustream’s financial results will be consolidated into VMware’s financial statements beginning in Q1 2016.
 
Virtustream is expected to generate multiple hundreds of millions of dollars in recurring revenue in 2016, focused on enterprise-centric cloud services, with an outlook to grow to a multi-billion business over the next several years. Virtustream will be a leader in hybrid cloud, one of the largest markets for IT infrastructure spending. The company will provide a complete spectrum of managed services for on-premises infrastructure and its enterprise-class Infrastructure-as-a-Service platform, enabling customers to move all their applications, including mission-critical applications, to cloud-based IT environments. Virtustream will offer a compatible public cloud experience for customers who deploy the Federation Enterprise Hybrid Cloud solution within their business.
 
"Through Virtustream, we are addressing the changes in buying patterns and IT cloud operation models that we are seeing in the market. Our customers consistently tell us that they are focused on their IT transformations and journeys to the hybrid cloud. The EMC Federation is now positioned as a complete provider of hybrid cloud offerings," said Joe Tucci, EMC Corporation Chairman and CEO.
 
The new business will incorporate and align the cloud capabilities of EMC Information Infrastructure, VCE, Virtustream and VMware to provide the complete spectrum of on- and off- premises offerings including: VMware vCloud Air, VCE Cloud Managed Services, Virtustream's Infrastructure-as-a-Service, and EMC’s Storage Managed Services and Object Storage Services offerings.
 
Virtustream will integrate these assets to provide customers with a unified infrastructure-as-a-service offering, designed to support the complete spectrum of business workloads, with a service portfolio that spans a full range of services and deployment options. The business will integrate and extend existing on-premises EMC Federation private cloud deployments into the public cloud, maintaining a common experience for developers, managers, architects and end users. Virtustream’s cloud services will be delivered directly to customers and through partners.
 
VMware will establish a Cloud Provider Software business unit led by Ajay Patel, VMware senior vice president, focused on delivering cloud software and solutions to cloud providers including VMware’s vCloud Air Network, to help them rapidly harness the opportunity of the hybrid cloud. This new unit will incorporate assets and people from the VMware vCloud Air Application Services business, vCloud Director and vCloud Air Network teams, as well as Virtustream’s Software Business including Advisor Planning and Migration tool, xStream cloud management platform and Viewtrust governance, risk and compliance solution.
 
Market Opportunity
 
Nearly one-third of all IT infrastructure spending is going to cloud-related technologies, according to a recent 451 Group report¹. In addition, the focus of Cloud Services buyers is seen to be shifting up to the application stack. The demand for a simple infrastructure on demand utility is giving way to higher levels of interest in solutions that include integration and management. Enterprise adoption overall is still on the rise with a shift in focus to private & hybrid architectures. The Global ERP market is estimated to reach $41.2B by 2020² with Cloud-based ERP now growing faster than on-premises ERP³.
 
Executive Quotes
 
Rodney Rogers, Chief Executive Officer, Virtustream
"I am honored and excited to have the opportunity to lead the new Virtustream,” said Rodney Rogers, CEO for Virtustream. “Our vision of combining our IP and collective cloud platform and services capabilities for mission-critical applications, backed by the strength and reach of EMC and VMware will deliver an enterprise-focused hybrid cloud solution that is unrivaled in the market. We expect Virtustream will become one of the top 5 service providers globally and are thrilled about what this means to all of our customers, partners, and the Federation moving forward.”
 
Pat Gelsinger, Chief Executive Officer, VMware
“The new Virtustream business will feature the industry’s broadest portfolio of hybrid cloud offerings, enabling customers to move all their applications to cloud-based IT environments and seamlessly manage their on-premises and off-premises environments.  We see tremendous growth opportunities for VMware and EMC with the new Virtustream business, building on the strong momentum of vCloud Air.”
 
David Goulden, Chief Executive Officer, EMC Information Infrastructure
“This is an exciting time for the EMC Federation of businesses, and today’s news is central to our strategy to help customers move all of their applications to the cloud. The new Virtustream business will enable customers to implement a hybrid cloud-based IT environment that incorporates the best of both public and private cloud quickly, and from one source. The Federation Enterprise Hybrid Cloud solution, along with the addition of Virtustream and vCloud Air cloud offerings, will not only offer customers choice and flexibility, but also will help them react quickly to optimize growth and transform their businesses.”
 
Additional Resources
 
·         Read VMware’s blog post by Ajay Patel
·         Connect with EMC on Twitter (@EMCCorp and @EMC_News), LinkedIn, Facebook and SocialSphere
·         Connect with VMware on Twitter, Facebook, LinkedIn and Google+
 
About EMC
EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset — information — in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com.
 
About VMware
VMware is a leader in cloud infrastructure and business mobility. Built on VMware's industry-leading virtualization technology, our solutions deliver a brave new model of IT that is fluid, instant and more secure. Customers can innovate faster by rapidly developing, automatically delivering and more safely consuming any application. With 2014 revenues of $6 billion, VMware has more than 500,000 customers and 75,000 partners. The company is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com.
 
About Virtustream
Virtustream, an EMC Federation company,  is trusted by enterprises and public sector organizations around the world to run and manage their mission-critical applications in the cloud. The company’s infrastructure-as-a-service solutions are built to address the complete spectrum of enterprise workloads, support hybrid cloud architectures with seamless integration into on-premises private clouds, and offer a full-stack management capability of infrastructure and application managed services that span on- and off-premises infrastructure. Virtustream is headquartered in Bethesda, Maryland with innovation and development centers in Palo Alto; Atlanta; Waldorf, Germany; Sofia, Bulgaria and Bangalore, India. The company has sales and delivery offices in Hopkinton, Dallas, Cork, London, Frankfurt, Tokyo and Sydney with data center locations around the world.
 
 
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All trademarks are either registered trademarks or trademarks of EMC Corporation in the United States and/or other countries, and all other trademarks used are the property of their respective owners.
VMware is a registered trademark or trademark of VMware, Inc. in the United States and other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective organizations.
¹ “Cloud Computing Market Overview” – 451 Group, May 2015 
² “Market Share Analysis, ERP Software, Worldwide, 2014” – Gartner, May 2015
³ “Global ERP Software Market 2013-2020” – Allied Market Research, Mar. 2015
 
Forward-Looking Statement
 
This release contains “forward-looking statements” as defined under the Federal Securities Laws, including statements regarding the formation of the new cloud services business and the benefits resulting therefrom. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) failure of the parties to finalize and enter into definitive agreements, (ii) failure of the parties to consummate the transaction even if such agreements are entered into; (iii) the failure to satisfy required accounting requirements for consolidating the cloud services business’s results into VMware’s financial statements or the timing of any such consolidation; (iv) adverse changes in general economic or market conditions; (v) delays or reductions in information technology spending; (vi) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vii) competitive factors, including but not limited to pricing pressures and new product introductions; (viii) component and product quality and availability; (ix) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (x) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (xi) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (xii) the ability to attract and retain highly qualified employees; (xiii) insufficient, excess or obsolete inventory; (xiv) fluctuating currency exchange rates; (xv) threats and other disruptions to our secure data centers or networks; (xvi) our ability to protect our proprietary technology; (xvi) war or acts of terrorism; and (xviii) other one-time events and other important factors disclosed previously and from time to time in EMC’s and VMware’s filings with the U.S. Securities and Exchange Commission. EMC and VMware disclaim any obligation to update any such forward-looking statements after the date of this release.