2nd UPDATE: Cisco, EMC, VMware Unveil Joint Venture
(Updates with additional details from Webcast, recent share prices and
background information.)
By Jerry A. DiColo
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Cisco Systems Inc. (CSCO), EMC Corp. (EMC) and VMware
Inc. (VMW) unveiled a joint venture Tuesday to help sell a new integrated data
center product, part of a broader alliance between the three giants as tech
companies move to offer a wider range of products and services.
The joint venture, called Acadia, will help sell and provide support to large
businesses and cloud service providers for the new product, named V-Block,
combining EMC's storage equipment, Cisco's virtualized servers and networking
gear, and VMware's virtualization technology.
The actual cloud infrastructure will be constructed by a coalition of the
three companies, called the Virtual Computing Environment. In addition to the
joint venture, the companies plan to continue to sell the product through their
existing channel partners.
Seeking growth in a stagnating IT spending environment, technology giants have
breached new markets, turning once stalwart allies into competitors. The
partnership of Cisco, EMC and VMware comes amid a wave of consolidation among
companies that provide hardware, software and services to corporate data
centers.
Following the actions of International Business Machines Corp. (IBM) and
Hewlett-Packard Co. (HPQ) to create one-stop IT shops, Dell Inc. (DELL)
announced in September it will purchase IT services firm Perot Systems Corp. (
PER). Software giant Oracle Corp. (ORCL), meanwhile, is awaiting European
antitrust approval for its acquisition of Sun Microsystems Inc. (JAVA).
Cisco Chief Executive John Chambers said during a Web presentation to discuss
the partnership that while most strategic coalitions have a high failure rate,
Cisco and EMC "have a very high ability to do this," based on trust and a shared
vision of where the market is going.
Cisco and EMC currently have an alliance to collaborate around Cisco's next-
generation data center platform, the Cisco Unified Computing System, which will
be a component of V-Block. EMC owns nearly 85% of VMware.
The integrated V-Block product will not end the three companies' practices of
selling individual products in partnerships with other tech firms.
"We are adding to the options that customers have; we are not removing the
options that customers have," VMware Chief Executive Paul Maritz said.
EMC Chief Executive Joe Tucci stressed that the Acadia joint venture is not a
move by the three companies into the outsourcing business. While Acadia will
offer support services, the coalition will continue to work with other service
providers that offer IT management.
The partnership between the three companies primarily targets what they call
the "private cloud," an offshoot of one of the biggest trends in technology,
cloud computing. Private clouds are designed to grab some of the cost savings
inherent in cloud computing, while allowing customers to maintain control over
their IT infrastructure.
Using V-Blocks, customers can decide what IT chores to run on their private
clouds while sending others to be completed by a cloud service provider.
"This coalition is about more than technology and partnership," Chambers said.
"It is about an entirely new and unique approach to the data center that
improves utilization, power consumption and security of information."
VMware and chip maker Intel Corp. (INTC) are currently minority investors in
the Acadia venture. The new company, expected to begin operations in early 2010,
will have approximately 130 employees.
"We are moving our top talent from both organizations into this," Chambers
said. EMC and Cisco are still searching for a chief executive for the new
venture.
The coalition should do a lot to accelerate the adoption of cloud computing
because the companies take out the complexities of creating the necessary
infrastructure, said Zeus Kerravala, an analyst at Yankee Group.
"The appeal is that someone can buy a prepackaged cloud computing system
instead of assembling one themselves," Kerravala said. "It's better to buy the
whole car than just the components." But even with the backing of three major
tech players, there likely won't be a lot of early takers as companies get their
feet wet in the cloud concept, he said.
Cisco shares slipped 18 cents to $22.82; EMC fell 4 cents to $16.39; and
VMware added 45 cents to $38.90.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@
dowjones.com
(Roger Cheng contributed to this report.)
(END) Dow Jones Newswires
11-03-091352ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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