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EMC and VMware will 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 finalising 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.
“Through Virtustream, we are addressing the changes in buying patterns and IT cloud operation models that we are seeing in the market,” says Joe Tucci, EMC chairman and CEO. “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.”
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.
Nearly one-third of all IT infrastructure spending is going to cloud-related technologies, according to a recent 451 Group report. 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 $41,2-billion by 2020 with cloud-based ERP now growing faster than on-premises ERP.
Rodney Rogers, CEO of Virtustream, comments: “I am honored and excited to have the opportunity to lead the new 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 five service providers globally and are thrilled about what this means to all of our customers, partners, and the Federation moving forward.”
Pat Gelsinger, CEO of VMware, adds: “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.”