EMC Corporation (EMC)’s Latest Acquisition, Virtustream, Will Help Company Get A Larger Chunk Of IaaS Segment
EMC Corporation (NYSE:EMC) is taking its campaign for a large piece of the managed services to the top gear with the buyout of Virtustream. The company is paying $1.2 billion to bring the IaaS asset under its armpit.
With the acquisition of Virtustream, EMC Corporation (NYSE:EMC) has succeeded to clearly reveal its thinking that there is more to be gleaned from IaaS segment. EMC seems to be hoping that Virtustream can be to it what SoftLayer was to the International Business Machines Corp. (NYSE:IBM). In other words, the company believes that taking over Virtustream is the path to becoming a well-rounded hybrid cloud provider.
IaaS is one area that EMC Corporation (NYSE:EMC) was lacking, but it is now moving to close whatever gaps existed there. EMC will add Virtustream to its growing portfolio of assets that include Pivotal, VCE and VMware, Inc. (NYSE:VMW).
In addition to getting its hands on a powerful IaaS asset, the acquisition of Virtustream will also enable EMC Corporation (NYSE:EMC) to boost its partnership with SAP SE (ADR) (NYSE:SAP). In addition to being an investor, SAP is also one of Virtustream’s largest customers.
Virtustream will also enable EMC Corporation to expand its partnerships, including with Oracle Corporation (NYSE:ORCL), whose applications Virtustream will start to manage in 4Q.
Besides SAP, Virtustream counts Coca-Cola Company (NYSE:KO), Hess, Heinz and others among its largest customers. Virtustream is more of a nice player than a direct rival to Amazon.com, Inc. (NASDAQ:AMZN)’s AWS and Microsoft Corporation (NASDAQ:MSFT)’s Azure. However, even as a niche asset, it remains to be seen how much of a game-change Virtustream could possibly be to the new owner EMC.
Virtustream is a $100 million revenue company that before its acquisition was plotting an IPO. The company generates 60% of its revenue from IaaS and the rest from software licensing. Virtustream has primarily focused on large enterprises, according to its CEO, Rodney Rogers.
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