EMC Adds Hybrid Cloud Management in Virtustream Acquisition

Storage giant EMC, continuing to collect new-gen tools and intellectual property in its move toward becoming a full-fledged cloud infrastructure provider, revealed May 26 that it is acquiring hybrid cloud management provider Virtustream for $1.2 billion in cash.

Despite the non-trivial cost of the transaction, EMC said that the acquisition will have little or no material impact on the company’s 2015 financials.

Six-year-old Virtustream provides a layer of cloud-management abstraction that sits above the virtual machine management layer and affords more accurate controls for administrators. In controlling that layer in the stack, Virtustream sets itself apart from other cloud management offerings.

Its application lifecycle control and automation functionality focuses specifically on I/O-intensive enterprise applications, such as SAP’s in-memory S/4HANA database, large conventional parallel databases and others, that run on highly automated, multi-tenant cloud systems.

Available On-Premises or as IaaS

The Virtustream products are available as both on-premises and cloud infrastructure-as-a-service (IaaS) deployments.

The company’s xStream platform, already integrated with VMware vSphere, is architected to guarantee deliver service-level agreements for not only infrastructure high availability, but also for application performance and transaction latency. These guarantees are unusual in this corner of the IT management business.

“Virtustream basically diffuses the definitional bounds of virtual machines in an enterprise system,” Rodney Rogers, CEO and co-founder of Virtustream, said on a conference call to journalists and analysts.

“This allows us to perform our own resource optimization and management algorithms. We break the cloud down to its molecular components. This allows us to eliminate resource contention and ultimately control throughput by way of controlling input and output operations.”

The movement of Virtustream into the EMC realm should be a smooth one. The San Francisco-based company has been a longtime partner of SAP, which also is a longtime partner of EMC, and of VMware, which is owned by EMC. Much of the Virtustream software already has been melded into that of EMC-owned companies.

Virtustream Will Comprise New Division of EMC

When the transaction closes in Q3 2015, Virtustream will comprise a new managed cloud services business for EMC. Rogers will manage the new division and report directly to CEO and Chairman Joe Tucci.

Virtustream customers include enterprises such as the Coca-Cola Company, Domino Sugar, Heinz, Hess Corporation, Kawasaki, Lexmark, Scotts Miracle-Gro and a global footprint of service provider partners who use Virtustream software to run their clouds.

EMC currently provides the Federation Enterprise Hybrid Cloud Solution, an on-premise private cloud offering that provides on-ramps to public cloud services, such as VMware vCloud Air and others. EMC Federation service provider partners will receive access to Virtustream’s xStream cloud management software platform, which will be incorporated into the EMC cloud.

Using Virtustream, EMC cloud customers will be able to move their entire application portfolio into a new-gen cloud environment, Tucci said. The acquisition will have no apparent effect on current Virtustream customers, according to EMC.