EMC explores selling stake in VMware
EMC Corp., a $60 billion tech giant specializing in cloud-based applications, has decided to explore selling its stake in VMware, a 16-year-old software services company, The Post has learned. — The decision to consider putting the Palo Alto …
Context & Ripple Effects
The New York Post's report that EMC is exploring a sale of its stake in VMware — an unconfirmed claim sourced to unnamed parties, but picked up within a day by Reuters, the Wall Street Journal, Re/code, Fortune, ZDNet and Business Insider — lands on a confirmed fact base: EMC has owned 80 percent of VMware since at least 2012. The story forces an explicit valuation question about a federation whose software arm has long outgrown its storage parent.
Timing matters inside the corpus: in August 2014 alone VMware signed partnerships with Docker, Google and Pivotal to bring container support to its platform and acquired CloudVolumes for real-time application delivery, extending a cloud-native push that dates back at least to its 2012 OpenStack commitment, which preceded EMC's own joining. Whoever buys the stake inherits that strategy mid-pivot.
First-order effects
- Any acquirer of EMC's 80 percent stake takes control of the virtualization franchise at the exact moment it is repositioning around containers via the Docker, Google and Pivotal deals and the CloudVolumes purchase.
- The exploration itself reprices both entities: EMC's market value gets tested against a sum-of-the-parts view in which VMware is the premium software asset and the hardware business carries the discount.
Second-order effects
- Rivals get a rare window while ownership of the virtualization and software-defined networking stack is in flux — Cisco already responded once to VMware's position by buying vCider after the Nicira acquisition.
- A change of control could redirect VMware's container and OpenStack alliances, since those partnerships were struck under EMC's umbrella and a new owner would set their terms.
Third-order effects
- If the pattern holds, storage-era federations unwind into pure-play software and hardware companies, with controlling stakes like EMC's in VMware treated as currency for consolidation rather than permanent holdings.
- Separation also resets governance of open-source infrastructure: a standalone VMware would answer to public-market owners rather than a hardware parent when deciding how far to back container and OpenStack ecosystems against its own hypervisor business.
The trend: Enterprise hardware-and-software conglomerates face growing pressure to break themselves apart, and EMC weighing a sale of its 80 percent VMware stake is a data point in that unwinding.