Intel will take a minority stake and a seat on the board of VMware when the virtualisation software vendor’s initial public offering (IPO) is completed in a few weeks time. VMware, presently a wholly-owned subsidiary of EMC, expects to raise $741 million from the sale of 10% of its common stock. Intel Capital, the chip maker’s venture investment arm, is primed to pay $218.5 million for a 2.5% stake that will also give it approximately 1% of voting rights in VMware.

In a statement VMware said Intel’s proposed stake will to cement what is already a close working relationship and “foster strengthened collaboration towards accelerating VMware virtualisation product adoption on Intel architecture and reinforcing the value of virtualisation technology for customers.”

The announcement also highlights the growing strategic importance of virtualisation technology in Intel’s key server and desktop platform markets, and in its competitive battle with AMD.

At a recent IDC virtualisation technology conference executives of Intel and AMD said the need to support virtualisation was now a key design drive for future products. So far, Intel has responded to fast growing interest in hosting virtual machines on its platforms with its Virtual Technology (VT) – chip level enhancements intended address security and performance issues connected with virtualisation. AMD has followed suit with similar support for virtualisation under its Pacifica programme.

Both chip makers are expected to compete fiercely to be the first to ‘migrate’ virtualisation software features directly onto silicon. With Intel now having minority interests in both VMware and SWsoft – which received backing from Intel Capital in 2005 -  AMD may fear that its major competitor will enjoy inside track access to technologies developed at these two virtualisation software pioneers.

Further reading

VMware IPO to boost virtual market