Cisco said to be selling most of VCE stake to EMC

A press alert from EMC that it will be announcing a "new business development" on Wednesday has triggered reports that the company plans to buy out most of Cisco's stake in their VCE converged infrastructure joint venture.

A press alert from EMC that it will be announcing a "new business development" on Wednesday has triggered reports that the company plans to buy out most of Cisco's stake in their VCE converged infrastructure joint venture.

Melding VCE's revenues with its own could give EMC a much-needed financial boost, according to Bloomberg, which first reported Tuesday on the anticipated split based on unnamed sources. Richardson, Texas-based VCE boasted in May of surpassing its 2013 goal of generating $1 billion in annual sales of its vblock Systems and other offerings, and has continued continued to pump out new products as recently as a couple of weeks ago.

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While neither Cisco nor EMC is commenting yet on the nature of Wednesday's announcement, it wouldn't surprise anyone if Cisco is backing away from VCE given that it increasingly is competing with EMC and its VMware virtualization/cloud subsidiary, another VCE partner that helped form the venture in 2009 (Intel was also an investor). We got Cisco and VMware executives this past summer to take part in a spirited debate over whose approach to building data centers was best.

Cisco has cozied up to EMC rival NetApp and hit the data center hard with its Unified Computing System servers, while VMware has gone head-to-head with Cisco via its acquisition of software-defined networking (SDN) company Nicira, whose products threaten to replace legacy routers. EMC's acquisition of Cloudscaling and Cisco's purchase of Metacloud, both OpenStack companies, has further complicated the VCE partners' relationship. Cisco has also lost a key data center executive to VMware recently.

EMC has been in the middle of much speculation in recent months. Over the summer, there was a push by some investors for EMC to ditch its 80% stake in VMware. More recently, reports surfaced about EMC and HP having held merger talks. And the latest speculation comes as IT industry breakups, from eBay-PayPal to Symantec and HP, have become all the rage.

Meanwhile, speculation over Cisco possibly curtailing investment in VCE arose earlier this month, with both Cisco and EMC dismissing such talk.

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