VMware officially spins-off from Dell
- 02 November, 2021 09:55
Raghu Raghuram (VMware)
VMware is once again a standalone company as it has officially split with its parent firm, Dell Technologies and untied the knot that has held them together since 2016.
The move is widely seen as a way for both companies to work with new partners and expand their respective technologies while keep close ties to each other.
It also has financial impacts. According to the Financial Times, Dell will shed its 81 per cent stake in publicly traded VMware, creating an independent software company with a stock market value of nearly US$64 billion. Dell’s remaining hardware operations have an implied value of US$33 billion, based on its latest share price.
About two-thirds of VMware’s revenue still comes from the more traditional business software segments of licensing and maintenance services, according to the Wall Street Journal. But the company has been steadily shifting to a cloud-based model. VMware recently said it expects subscription revenue to exceed 40 per cent of its total revenue in its fiscal year ending in January 2025, the Journal stated.
In addition the companies said they expect the spinoff will give both companies financial flexibility while letting them continue growing their tight business-development partnership. That includes services such as VMware Cloud on Dell EMC, which combines VMware’s high-performance compute, storage, and networking software integrated with Dell EMC hyperconverged infrastructure (HCI).
The companies are also expected to work together in new areas including edge, telco, and 5G, according to the spin-off arrangement. There is also a commitment to continue driving VMware revenue through Dell’s sales channel and continue VMware offering Dell Financial Services, the companies stated.
VMware CEO Raghu Raghuram wrote in a blogthat the company will be more flexible to partner more deeply with cloud and on-premises providers.
"And the increased flexibility we will have to use equity to complete future acquisitions will help us remain competitive," he said. "Today’s move will strengthen our mission to be the Switzerland of the cloud industry, uniquely positioned to provide our customers with the best combination of options as we grow our robust ecosystem of partners.”
Raghuram said in a recent Network World article that the split could also move from under Dell's shadow. “The Dell spin-off will let partners look at VMware in a new light and allow us more flexibility in growing our own business,” Raghuram said.
In the same article Scott Miller, senior director of strategic partnerships for World Wide Technology (WWT), a technology and supply-chain service provider and a VMware partner said: “VMware’s spinoff from Dell should provide some more confidence for our clients that have standardised their server or storage infrastructure on other options from Dell and that VMware will be working with even more closely in the future to remain independent of any one OEM’s influence.”
VMware says its mission is to provide foundational multi-cloud platforms for accelerating digital business.
“We provide a ubiquitous consistent software platform across clouds, data centres, and edge with which customers can rapidly build and modernise their applications," Raghuram said. "We empower them to operate their entire distributed environment with optimal cost, security and governance while leveraging their existing investments in our technology and skills to go faster to the future."