EMC Acquires VMware for $635 Million


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In a surprise announcement late yesterday, Massachusetts-based

storage giant EMC revealed that it will purchase virtual-computing

software maker VMware for $635 million. The deal expands EMC's

business into the so-called utility computing market and gives the

company another avenue for software-based revenues. The VMware deal

follows two of EMC's other recent high-profile software company

purchases: backup-and-recovery software maker Legato Systems and

digital-document software-management firm Documentum. Taken together,

these purchases send the clear signal that EMC is moving beyond the

increasingly commoditized storage-hardware market.

"Customers want help simplifying the management of their IT

infrastructures," EMC President and CEO Joe Tucci said. "This is more

than a storage challenge. Until now, server and storage virtualization

have existed as disparate entities. Today, EMC is accelerating the

convergence of these two worlds. With the resources and commitment of

EMC behind VMware's leading server virtualization technologies and the

partnerships that help bring these technologies to market, we look

forward to a prosperous future together."

VMware makes virtual-computing software that lets companies run

multiple OS environments on one machine in separate, easily managed

units. Enterprise customers typically use the software to host legacy

machine environments, such as Windows NT 4.0, as they upgrade

mainstream servers to newer OSs and to test deployments of new

systems. Users can also bring virtual-machine environments online as

needed to aid in additional server-load situations, such as those an

e-commerce site might experience during the holiday sales rush.

Because VMware virtual machine (VM) environments appear as simple

files to the host system, users can easily copy, move, or duplicate

those environments--a boon for testing and backup purposes.

Earlier this year, Microsoft snapped up VMware's largest

competitor, Connectix Virtual PC, for an undisclosed amount. Microsoft

also released the most recent version of its VM client product,

Virtual PC 2004, and will ship a server version in early 2004. Like

Microsoft, VMware ships client and server versions of its software,

and EMC now plans to integrate some of its storage technologies in

future versions of the VMware product line.

--WinInformant

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