EMC buys VMware for $635 million in cash

16 December 2003 Storage hardware giant EMC has acquired virtual machine software supplier VMware for $635 million in cash.


EMC CEO Joe Tucci rationalised the deal by suggesting that it would help the company to unite server and storage virtualisation. “Until now, server and storage virtualisation have existed as disparate entities. Today, EMC is accelerating the convergence of these two worlds,” said Tucci.

VMware is a pioneer of virtual machine software for Microsoft Windows and Linux operating systems. The software can host multiple copies of Windows or Linux, plus accompanying applications, on a single server.

While such capabilities were common on mainframe computers and Unix operating systems as long as the 1970s and 1980s, their absence from Windows and Linux until recently has contributed to the proliferation of large and increasingly unmanageable ‘server farms’ in many organisations.

However, while EMC is paying a high price, VMware has been growing fast and would have been on track for a public stock offering in the near future.

Although VMware never publicly disclosed its revenues, Erez Ofer, executive vice president of technology strategy at EMC, suggested that this year the company was heading for revenues of just under $100 million, which were forecast to more than double in 2004.

The source of that fast growth was the release of its server-based virtual machine software, which was only launched in 2001.

A key limitation of that initial release was only addressed with the February 2003 launch of VirtualSMP, which provides support for true multiprocessing machines. Before that, each VMware partition was limited to a single processor, limiting its scalability.

VMware claims to have more than 5,000 customers, with about 1,500 running the company’s enterprise server products, rather than the older workstation virtualisation software.

Other competitors to VMware include SWSoft and Microsoft, which acquired VMware’s competitor Connectix at the beginning of 2003.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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