This article is part of our Essential Guide: Chronicling the Dell-EMC merger news

VMware backs out of Virtustream hybrid cloud venture with EMC

Virtualisation giant confirms exit from hybrid cloud joint venture with parent company

VMware is no longer involved in EMC’s bid to create a new hybrid cloud services business around the Virtustream brand, several months after the venture was first mooted.

The company confirmed it had exited the venture in an 8-K regulatory filing containing details about personnel changes within its board of directors, which stated: “VMware announced that it will not be participating in the formation of the Virtustream Cloud Business previously announced by EMC and VMware on 20 October, 2015.”

The Virtustream joint venture announcement came shortly after news of Dell’s bid to acquire EMC was first made public, and the initiative was on course for finalisation in early 2016.

At the time, VMware and EMC had both talked up the “hundreds of millions of dollars” they expected to bring in by using the Virtustream brand – which EMC acquired in May 2015 – to market their storage, virtualisation and converged infrastructure kit.

The venture would also have been a means for both firms to provide managed services in on-premise environments, as well as infrastructure as a service and public cloud offerings, with Virtustream – at the time – set to become part of the VMware family.

Speculation about VMware’s continued involvement in the venture has been growing since last month, in the wake of a Reuters report that suggested EMC was about to downsize the virtualisation software giant’s role in it.

This followed ongoing concerns about how news of EMC’s proposed acquisition by Dell had negatively affected VMware’s share price since news of the deal first broke in mid-October.

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At the time of the Reuters report, shares in VMware had lost about a quarter of their value since the merger – tipped to be the biggest in enterprise IT history – was first proposed.

In a statement to Computer Weekly, VMware confirmed the contents of the 8-K filing, and said it would now focus its efforts on driving adoption of its own hybrid cloud portfolio.

“VMware will continue to operate the VMware vCloud Air business, focused on helping customers seamlessly extend their datacentre applications to the cloud,” the statement said. “VMware also continues to deliver cloud software and solutions to cloud providers through VMware’s vCloud Air Network.”

Computer Weekly also contacted EMC to comment on this story, but had not received a response at the time of publication.................................................

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