EMC And VMware Spin Out Virtustream As Jointly Owned Company
Ron Miller / TechCrunch :
Context & Ripple Effects
Virtustream only entered EMC's portfolio in May, when EMC paid $1.2 billion for the enterprise cloud provider as the centerpiece of its cloud push; by July it had pruned the other end of the portfolio, selling the Syncplicity sync-and-share product to private equity. Today's move extends that reshaping: rather than owning Virtustream outright inside the parent, EMC proposes to hold it alongside VMware as a jointly owned company.
The structure matters because of who the partner is — VMware is itself an EMC-controlled company, so this is less a conventional joint venture than a rearrangement of assets inside one family, splitting the cloud bet between parent and subsidiary.
First-order effects
- EMC converts a wholly owned acquisition into a shared vehicle, putting Virtustream's enterprise cloud business on VMware's books too instead of carrying it alone.
- VMware gains direct ownership exposure to infrastructure-as-a-service revenue that complements, and partially overlaps, its own cloud management franchise.
Second-order effects
- The arrangement forces both companies to draw boundaries between VMware's cloud offerings and Virtustream's — the kind of overlap that made the deal fragile, and indeed reporting weeks later had VMware assuming only a minority stake (Reuters sources) before walking away from the joint venture entirely, leaving EMC holding the asset.
- A failed or downsized JV pushes EMC back to carrying Virtustream solo at a moment when it was already divesting peripheral cloud products like Syncplicity, concentrating its cloud position rather than distributing it.
Third-order effects
- If the pattern holds, corporate structure — who owns which cloud asset inside the EMC-VMware family — keeps churning until the group settles on either a consolidated cloud platform or a clean separation of the two franchises; the JV's rapid unraveling suggests shared ownership between parent and controlled subsidiary is harder to govern than outright ownership.
- For enterprise buyers, the episode signals that incumbent storage vendors' cloud commitments are being made and unmade through M&A and restructuring rather than long-lived product lines, making vendor cloud roadmaps a moving target.
The trend: Legacy enterprise infrastructure vendors are assembling and dismantling cloud businesses through acquisition and intra-family spin-outs, with EMC's Virtustream shuffle a case study in why shared ownership rarely survives contact with product overlap.