It’s official: VMware and Dell have split up





VMware is once again a standalone company, as it has officially split with parent company Dell, untying the knot that has held them together since 2016.

The move is widely seen as a way for both companies to work with new partners and expand their respective technologies, while maintaining close ties with each other.

It also has financial implications. According to the Financial times, Dell Technologies will divest its 81% stake in publicly traded VMware, creating an independent software company with a market cap of nearly $64 billion. Dell’s remaining hardware business has an implied value of $33 billion, based on the latest share price.

About two-thirds of VMware’s revenue still comes from the more traditional business software segments of licensing and maintenance services, according to the Wall Street Journal. But the company has been steadily moving to a cloud-based model. VMware recently said it expects subscription revenues to exceed 40% of total revenues in its fiscal year ending January 2025, the Journal said.

In addition, the companies said they expect the spin-off will give both companies financial flexibility while continuing their close partnership for business development. That includes services such as VMware Cloud on Dell EMC, which combines VMware’s powerful compute, storage and networking software with Dell EMC hyperconverged infrastructure (HCI).

The companies are also expected to collaborate in new areas, including edge, telco and 5G, under the spin-off arrangement. There is also a commitment to continue to drive VMware revenues through Dell’s sales channel and continue to offer Dell Financial Services through VMware, the companies said.

VMware CEO Raghu Raghuram wrote in a blog that the company will be more flexible to collaborate more deeply with cloud and on-premises providers. “And the greater flexibility we will have to use equity to complete future acquisitions will help us remain competitive. Today’s move will strengthen our mission to be the Switzerland of the cloud industry, uniquely positioned to give our customers the best combination of options as we grow our robust ecosystem of partners.”

Raghuram said in a recent Network World article that the split could also come under Dell’s shadow. “The Dell spin-off will allow partners to look at VMware in a new light and give us more flexibility in growing our own business,” said Raghuram.

In the same article, Scott Miller, senior director of strategic partnerships for World Wide Technology (WWT), a technology and supply chain service provider and a VMware partner, said: “VMware’s spin-off from Dell should bring a little more confidence to our customers. who standardized their server or storage infrastructure on other options from Dell and with whom VMware will work even more closely in the future to remain independent of the influence of an OEM.”

VMware says its mission is to provide foundational multicloud platforms for accelerating digital business.

“We provide a ubiquitous consistent software platform across clouds, data centers and edge that enables customers to quickly build and modernize their applications. We enable them to operate their entire distributed environment with optimal cost, security and management, while leveraging their existing investments in our technology and skills to move faster into the future,” said Raghuram.

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Copyright © 2021 IDG Communications, Inc.




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