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October 21, 2015

EMC ensures VMware’s independence with new cloud unit

News: Success of Virtustream could play a significant role in VMware's independence.

By James Nunns

EMC is pushing Virtustream to lead its new cloud business unit.

The plans would see VMware software brought into Virtustream in a planned cloud services business. This means that vCloud Air and Virtustream’s object storage and managed cloud services will form the core of the new entity.

Virtustream was acquired by EMC in May for $1.2 billion but will now be launched as a spin-out company that is owned 50/50 by VMware and EMC.

Using EMC, VCE hardware and VMware software at its core, it may be positioned as a competitor to the likes of AWS, Google and Microsoft.

The move plays to VMware maintaining its independence following Dell’s acquisition of EMC for $67 billion.

Rodney Rodgers will lead Virtustream as CEO but will report to a board that includes Joe Tucci, EMC chairman and Pat Gelsinger, CEO VMware.

Gelsinger said on an earnings call that he expects Virtustream to become one of the top five cloud providers’ worldwide. The revenue from Virtustream will be consolidated into VMware’s own results.

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The company reported its revenues for the third quarter at $1.67bn compared to $1.51bn for the same period last year.

Net income was $256m, or $0.60 per diluted share, compared to $194m, or $0.45 per diluted share, in the year-ago period.

License revenues increased 7% to $681m ad operating income rose 35% to $326m.

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