EMC Buys Cloud Software Firm Virtustream for $1.2 Billion
By acquiring the relatively young but fast-growing cloud software and services company Virtustream, EMC says it is adding a "transformational element" to its cloud-focused customer strategy. EMC announced today that it was purchasing the firm in a $1.2 billion, all-cash deal.
Founded in 2009, the privately held Virtustream has grown quickly to serve customers including Intel, SAP, Barclays, Yum Restaurants, The Coca-Cola Company, Heinz and the National Institutes of Health. Virtustream specializes in deploying SAP software in the cloud.
Once the transaction closes, expected in the third quarter of this year, Virtustream will become EMC's new managed cloud services business. EMC plans to offer those services both directly and through its provider partners.
'Possibilities Are Just Awesome'
"We've built some very unique IP (intellectual property) in a short period of time," Virtustream CEO Rodney Rogers said today during a conference call about the acquisition. The company's technology enables customers to automate a wide variety of IT functions both reliably and at a competitive cost, he said. By becoming part of the EMC Federation of businesses, "we think the possibilities are just awesome," Rogers added.
Virtustream has seen organic growth rates "in the 60 percent range" for several years, Rogers said, and the company is already on track to exceed that this year. In contrast, both EMC and its major subsidiary, VMware, have seen slowing growth in sales and revenues over the past few quarters. EMC has been under pressure to sell VMware but decided earlier this year not to do so, according to Reuters.
The addition of Virtustream to EMC's stable is a "game changer," according to EMC Chairman and CEO Joe Tucci (pictured).
EMC Deal 'An Easy Decision'
"Virtustream is an exceptional company and this is a critical and transformative acquisition for EMC in one of the industry's fastest-growing and most important sectors," Tucci said. "With Virtustream in place, EMC will be uniquely positioned as a single source for our customers' entire hybrid cloud infrastructure and services needs."
While EMC currently offers its own on-premise, private cloud offering, the Federation Enterprise Hybrid Cloud Solution, the addition of Virtustream's technology will expand that offering's capabilities for both off- and on-site delivery, enabling EMC customers to move their entire portfolio of apps into the cloud.
"We are a firm believer that you can run any application in the cloud," said Rogers, who will lead the new cloud services business for EMC and report to Tucci. "We believe that we help fulfill the EMC vision of being able to run any type of enterprise application in the cloud, anywhere in the world, through ultimately whatever method of consumption makes sense for the customer."
Choosing EMC, was an easy decision, Rogers said. "In addition to the terms EMC proposed, the enterprise-focused technology and service assets within the EMC Federation are, in our opinion, unparalleled," he added.