EMC, VMware to merge data and cloud app assets into new group

Reuters News
Posted: Dec 04, 2012 12:47 PM

(Reuters) - EMC Corp, the world's leading maker of corporate data storage equipment, and its publicly-traded subsidiary, software maker VMware Inc, are planning to merge their data analytics and cloud application assets, EMC said on its website.

EMC said on Tuesday the companies expect to combine a number of divisions into the new group - called the Pivotal Initiative - by the second quarter of 2013 and said the specific operational structure will be determined then.

Paul Maritz, EMC's Chief Strategy Officer, will head the group, EMC said.

An EMC spokeswoman declined to elaborate on the plans.

The companies will provide an update on the details of the plans in the first quarter of next year, EMC said.

The move will combine EMC's data analytics division Greenplum and its Pivotal Labs group with VMware's vFabric, SpringSource and Gemstone units as well VMware's data analytics company Cetas and CloudFoundry, a cloud computing platform as a service.

This will affect about 600 employees from VMware and 800 employees from EMC, the company said.

Analysts said the realignment may eventually result in a spin-out of the new group.

"This is a very good move," said Kaushik Roy, a longtime EMC watcher who is a principal with Hercules Technology Growth Capital.

"Both companies have applications that are overlapping," he said, adding that "if things go well they may spin it off".

Tech analyst Alkesh Shah at Buckingham Research Group said the companies could decide on a partial spin-out of the unit in 2014/2015.

"This realignment should enable EMC to position itself more as a Cloud enabler while VMware can concentrate on its expanded strategy of the software-defined datacenter," Shah said.

(Reporting By Nicola Leske, editing by Nick Zieminski)