EMC acquires large stake of VCE from Cisco

Leaves Cisco with 10 per stake in joint venture

Cisco has cut back its stake in converged infrastructure joint venture VCE to around 10 per cent.

The tri-vendor coalition (consisting of VMware, Cisco and EMC) helps customers build private cloud infrastructure, and the change in ownership will see EMC taking control of the business.

In a statement on VCE’s website, all parties said they hope to finalise the deal this quarter with VCE becoming an EMC business.

Cisco and VMware will continue as strategic partners and investors, with Cisco having an approximate 10 per cent equity interest in VCE.

Cisco had previously had a 35 per cent stake in the firm. The terms of the deal were not disclosed.

Cisco chief executive John Chambers said VCE “represents another example of Cisco’s strategy of aggressively investing to drive key market transitions”.

“VCE was created to positively disrupt datacentre architectures utilising Cisco’s UCS and Nexus platforms, and we have been thrilled with the execution, results and customer demand the VCE team has delivered,” he added.

“I look forward to the next chapter of VCE’s evolution and Cisco’s continued commitment in VCE as a crucial route to market for Cisco’s next-generation technologies for the datacentre and cloud.”

VCE will now form another pillar in the EMC family alongside VMware, Pivotal and RSA.

EMC chief executive Joe Tucci said EMC’s controlling interest in VCE would allow it to increase the converged infrastructure options for customers and this would help them “take better advantage of hybrid cloud and next-generation IT opportunities.”

As for VCE itself, there won’t be any significant changes. It will continue to be run by chief executive Praveen Akkiraju.

Akkiraju said it was important to “understand the context” behind the move.

“We were created to disrupt the traditional siloed infrastructure market, and without a doubt our initial joint venture structure was a great fit for this mission,” he said.

“However, now that VCE is a $2 billion company looking to expand beyond platforms to deliver hybrid cloud solutions, it’s critical to evolve to a structure that supports our broader mission from the technology and financial perspectives."

In a blog post, VCE chairman Howard Elias, president and COO of EMC Global Enterprise Services, and Gary Moore, president and COO of Cisco said that they wanted to signal that VCE was in for the long haul and Cisco’s commitment to VCE continues in the form of a multi-year resale, support and engineering agreement.

“The partnership remains strong and VCE will be a vibrant channel for Cisco technologies going forward. In essence, we started with a JV structure that has been wildly successful, so now it’s time to show commitment for the long term in a way that fits the business models of EMC and Cisco well."

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