EMC must sell VMware to end the companies’ joint state of "limbo" in which they compete with one another’s products, according to one of the storage firm’s largest shareholders.

Activist investor Elliott Management wrote a public letter to EMC’s head honchos, collectively known as ‘the Federation’, today with a litany of complaints ending in a demand that the storage giant spin off the virtualised storage firm it acquired a decade ago.

Elliott Management, which owns a 2.2% stake in EMC, claimed the hardware specialist has hampered VMware’s progression in the software-defined storage market and called its alleged underperformance in the stock market "astonishing" since buying the firm in 2004, citing a nadir of a 64% gap in performance between EMC and its rivals.

Jesse Cohn, the portfolio manager who signed off on the letter, wrote: "We believe it may be advantageous for EMC to pursue a spin-off of VMware.

"Management continually states that EMC II and VMware are ‘better together.’ But this sentiment is at odds with the reality that the Federation keeps the two companies in a sort of limbo where they are ‘together but not really.’ The Federation has actually created the worst of both worlds.

"Today, EMC II and VMware are completely at odds. Both EMC and VMware have grown and are now competing against one another, confusing customers, employees, [Wall] Street analysts and shareholders."

Elliott Management goes on to claim the Federation must be broken up. "The reality today is that the Federation structure, which may have served EMC well years ago, no longer does," Cohn wrote.

It cited that aforementioned poor stock market performance, the increasingly competing products and a perceived undervaluation in core EMC (EMC minus VMware) as reasons behind the shareholder’s thinking.

The news comes after HP announced its intention to split itself in half, putting its printer and PC businesses into new company HP Inc and its server, storage, networking and cloud technologies into another called Hewlett-Packard Enterprise.

Enterprise would be more active in mergers and acquisitions, according to its CEO Meg Whitman.

Elliott Management has suggested two solutions; either selling VMware or letting EMC be acquired by another corporation, saying it has "attractive" assets.

CBR has approached EMC for comment.