Investor Pushes EMC to Spin Off VMware
In addition, EMC's federation strategy is becoming unworkable, according to Elliott Management. Under the model, EMC's businesses—VMware, RSA (security), EMC II (storage) and Pivotal (big data and platform-as-a-service, or PaaS)—run as independent-minded entities that will leverage their capabilities to offer end users stacks of services and solutions, all of which is managed by EMC and Tucci. However, the federation model can only work with Tucci in charge, and as part of a succession plan, it should go away, Elliott officials said. A day after Elliott sent its letter to EMC, the company announced the first of five planned software-based data center offerings that leverage technologies from the various businesses. The Federation Software-Defined Data Center Solution includes management, orchestration, hypervisor, cloud and networking technologies from VMware, storage and data protection technologies from EMC, PaaS offerings from Pivotal, and a choice of hardware that includes systems from VCE. As Elliott pushes its argument, there also was speculation that EMC and Cisco Systems were considering pulling their financing from VCE, a joint venture between them and VMware that builds converged data center solutions. Spokespeople with both Cisco and EMC denied plans to withdraw support from VCE, though some reports have said the companies will not invest any more money in the joint venture. In addition, the latest round of speculation comes weeks after reports surfaced that EMC and HP had been negotiating a merger for about a year before talks broke off.
HP's decision to split in two is part of a growing trend in the tech industry in which larger vendors are breaking apart or shedding businesses to become more focused, nimble and profitable. For example, Symantec officials Oct. 9 said the company was splitting in two, with one business focusing on security software and the other on storage and information management. In late September, eBay said it plans to spin off its PayPal online payment processing management business.