EMC And VMware Both Stand To Gain From AcquisitionEMC And VMware Both Stand To Gain From Acquisition

VMware, recently acquired by storage maker EMC Corp., will continue to operate as an independent subsidiary, with Diane Greene staying on as VMware's president. The move gives EMC unfettered access to one of the hotter virtualization technologies while adding some heft to the relatively small VMware. EMC wants to grow its software revenue to 30% of its total revenue, Greene says.

It's not unusual for companies to start using VMware in their test and development environments, but not on their production, or day-to-day, systems. "Production deployments have been more the exception than the rule," Greene says. VMware is hoping to flip that trend. The company had already added consulting services before EMC entered the picture. EMC, which had $5.4 billion in sales in 2002, gives VMware additional clout. "With EMC behind us, people know we're here to stay," she says.

Greene found out about EMC's plans to buy her company around Thanksgiving. She says she hadn't been looking for a buyer. Although VMware has developed tight relationships with Hewlett-Packard and IBM, which compete with EMC in the storage market, Greene is confident she'll be able to keep doing business with them. "We're a crucial piece to [IBM's and HP's] utility-computing strategies," she says. "And with EMC behind us, neither of them has to worry about us falling into the other's hands."

Nick Bowen, IBM's VP of Unix and xSeries software development, echoes Greene's sentiments. He doesn't think his company's relationship with VMware will change now that EMC is part of the picture. "I'm just glad they're not a part of a server competitor."

VMware will continue to develop its server virtualization software. Where the company will get stronger is in the development of APIs that connect with different storage systems, Greene says.

The word is spreading about VMware's technology. Greene says that when EMC brought the proposed acquisition of VMware up before its customer council, half of those companies were already running VMware and the other half were familiar with the technology.

Illustration by Celia Johnson

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