Store This: EMC Acquires VMWare for $635 Million

   In a surprise announcement late yesterday, Massachusetts-based storage giant EMC revealed that it will purchase virtual-computing software maker VMware for $635 million. The deal expands EMC's business into the so-called utility computing market and gives the company another avenue for software-based revenues. The VMware deal follows two of EMC's other recent high-profile software company purchases: backup-and-recovery software maker Legato Systems and digital-document software-management firm Documentum. Taken together, these purchases send the clear signal that EMC is moving beyond the increasingly commoditized storage-hardware market.
   "Customers want help simplifying the management of their IT infrastructures," EMC President and CEO Joe Tucci said. "This is more than a storage challenge. Until now, server and storage virtualization have existed as disparate entities. Today, EMC is accelerating the convergence of these two worlds. With the resources and commitment of EMC behind VMware's leading server virtualization technologies and the partnerships that help bring these technologies to market, we look forward to a prosperous future together."
   VMware makes virtual-computing software that lets companies run multiple OS environments on one machine in separate, easily managed units. Enterprise customers typically use the software to host legacy machine environments, such as Windows NT 4.0, as they upgrade mainstream servers to newer OSs and to test deployments of new systems. Users can also bring virtual-machine environments online as needed to aid in additional server-load situations, such as those an e-commerce site might experience during the holiday sales rush. Because VMware virtual machine (VM) environments appear as simple files to the host system, users can easily copy, move, or duplicate those environments--a boon for testing and backup purposes.
   Earlier this year, Microsoft snapped up VMware's largest competitor, Connectix Virtual PC, for an undisclosed amount. Microsoft also released the most recent version of its VM client product, Virtual PC 2004, and will ship a server version in early 2004. Like Microsoft, VMware ships client and server versions of its software, and EMC now plans to integrate some of its storage technologies in future versions of the VMware product line.

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