VMware buys management software from parent EMC

One of the stranger acquisitions in the technology industry thus far this year...

VMware, which is owned by EMC, is acquiring a portion of EMC's software business, in what has to be one of the stranger acquisitions in the technology industry thus far this year.

VMware is paying up to $200 million to parent company EMC to acquire several software product lines from EMC's Ionix IT management business, in a move that may be indicative of growing integrations between the two companies. EMC purchased VMware in 2004 and has largely allowed it to be run as an independent entity, but their relationship has been a source of friction.

Former VMware CEO and co-founder Diane Greene long argued that the virtualization company needed to maintain independence so it could cultivate partnerships with other IT companies, including EMC's rivals in the storage market. EMC still allows VMware to partner with competing storage vendors, but fired Greene in July 2008 in a move apparently caused by rifts between Greene and the EMC leadership. Greene was replaced by former Microsoft executive Paul Maritz.

An EMC executive indicated that Thursday's transaction would have been less likely to happen if Greene were still VMware's CEO. When asked if negotiations between the companies were difficult, Jay Mastaj, general manager of EMC's Ionix division, said "Let's put it this way: It was a hell of a lot easier than when Diane was here."

EMC and VMware revealed the Ionix news in a press release that treated the deal as if it were a standard transaction, not mentioning the fact that EMC is VMware's majority owner. The transaction, all cash, is expected to close between April and June.

Specifically, VMware will take control of EMC software products FastScale, Application Discovery Manager, Server Configuration Manager and Service manager, and take on some engineering, sales and other personnel from EMC.

EMC will retain the Ionix brand, the remaining Ionix products and maintain the right to resell the products acquired by VMware.

With the Ionix management products in tow, VMware will be better able to manage and deploy servers and applications in virtualized data centers, the companies said.

"This will help them accelerate the work they're doing in the vCenter [management suite] and give them a foundation for building the data center of the future, and being able to manage that," Mastaj said.

Although EMC isn't pulling out from the IT management market, dishing off some of its assets to VMware could be seen as acknowledgement that EMC isn't likely to break into the top tier dominated by BMC, CA, HP and IBM.

"We're winning as many as we're losing, but we don't have the market share that the Big Four have," Mastaj said.

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