EMC Boosts Cloud Strategy With Virtustream Deal
EMC Corp. moved to flesh out its managed cloud services business with the acquisition of enterprise cloud software and services provider Virtustream in a deal valued at approximately $1.2 billion.
The acquisition is also being portrayed as "elevating" EMC's current alliances with VMware on the virtualization side and SAP on the applications end.
EMC, Hopkinton, Mass., said Tuesday (May 26) the all-cash acquisition has been approved by the boards of both companies and is expected to close in the third quarter of 2015. Virtustream CEO and co-founder Rodney Rogers will report to Joe Tucci, EMC's chairman and CEO.
Tucci noted during a conference call the overwhelming preference among enterprises for hybrid cloud infrastructure. "If you don't have a cloud-first strategy, you don't have a strategy," Tucci added. "We needed to fill this piece of the puzzle."
EMC has been transitioning from a traditional storage vendor to a full-service provider of hybrid cloud infrastructure and services supplier via its "Federation of businesses" strategy. The company said Virtustream's cloud software and infrastructure-as-a-service products would be delivered through its Federation partners that VMware. Virtustream would operate as a separate EMC Federation unit, the company said.
Through the acquisition, EMC service provider partners would get access to Virtustream's xStream cloud management software platform. They can then deliver branded services based on the platform.
EMC said it would incorporate the Virtustream cloud services platform into its Federation enterprise hybrid cloud offering as a way for customers to move applications to the cloud. EMC's on-premise private cloud currently offers "on-ramps" to public cloud services like VMware's vCloud Air.
Tucci noted that Virtustream's xStream platform "is tightly integrated with VMware software." He also downplayed assertions of too much overlap between vCloud Air and xStream services. "We'll have the proper amount of overlap," Tucci asserted.
Virtustream rolled out version 3.0 of its xStream cloud management platform in June 2014. The tool was upgraded to provision, run and manage VMware and OpenStack workloads within the same user interface. Along with supporting VMware virtualization, the upgrade was touted as maintaining data security while provisioning and running workloads on top of OpenStack.
The EMC federation joined the OpenStack Foundation in December 2014.
Rogers described xStream as a control plane that enables connections in hybrid clouds while targeting "very I/O-intensive apps" like SAP HANA. "We break the cloud down to its molecular components," he explained. "It's all about the app's performance on that infrastructure."
Along with features like automated compliance and maintenance, the xStream platform has a "throttling" capability for high I/O applications like SAP HANA. The platform's software abstraction layer runs on top of the virtualization layer and is "tightly integrated with VMware," Rogers stressed.
The company's cloud management technology also stresses automation of applications and other cloud functions. It automation templates are used to manage functions like security patch updates and other upgrades. It also automates security compliance along with features like encryption of data in motion and at rest.
Rogers said there were plans to take Virtustream public by the end of this year. At that point, suitors emerged and "we chose EMC."
The deal also strengthens EMC's ongoing partnerships with SAP, an investor in Virtustream. "The nature of Virtustream's technology allows [the merged companies] to optimized SAP HANA," Rogers claimed.