EMC Corporation EMC, in a bid to strengthen its position in cloud infrastructure services, recently acquired cloud and software services company, Virtustream for approximately $1.2 billion. This move is pivotal for EMC given the shift of its customer applications to cloud-based IT platforms.
Virtustream, established in 2009, offers application lifecycle automation and orchestration for enterprises. The company’s offerings are primarily focused on mission-critical enterprise applications that are I/O-intensive like SAP HANA.
Synergies for EMC
Virtustream will be a key factor in shaping the company’s upcoming managed cloud services business. This acquisition will allow EMC to offer a wide hybrid-cloud product portfolio that is compatible with the entire range of applications, workloads and cloud models. The addition of Virtustream is expected to give EMC a premier place in the hybrid cloud infrastructure and services market with tools to meet all customer requirements.
Additionally, Virtustream has already made a name for itself in the industry, specializing in migration, execution and management of important cloud applications, which is like to add value to EMC’s offerings.
Moreover, Virtustream's xStream platform can be seamlessly integrated with VMware vSphere. The joint unit can be planned in a way that it can provide service level agreements (SLAs) for infrastructure availability, application performance and even transaction latency. Following the acquisition, Virtustream's xStream cloud management software platform will be accessible to EMC Federation service provider partners. The partners will also be able to design and provide their own branded services through the xStream platform.
Apart from this, Virtustream's cloud software and Infrastructure-as-a-Service offerings will be made available to customers directly and via partners even after the acquisition.
EMC will also benefit from Virtustream’s impressive list of customers including The Coca-Cola Company KO, Domino Sugar, Heinz, Hess Corporation HES, Kawasaki, Lexmark International Inc. LXK and Scotts Miracle-Gro. The company also has a wide range of service provider partners that use its software to develop their cloud offerings.
To Conclude
We believe that this acquisition will significantly boost EMC’s position in the cloud computing industry, especially given the demand for hybrid cloud offerings. Hybrid cloud is a combination of public and private clouds that function independently but are connected together so that the enterprises can get dual benefit. The adoption of these hybrid clouds allows the enterprises to have both on-premises computational infrastructure and cloud storage for core data. As a result, the firms are vouching for hybrid cloud instead of conventional clouds.
According to the research firm- MarketsandMarkets, the hybrid cloud market is expected to reach the $84.67 billion mark by 2019. RightScale’s ‘2015 State of the Cloud Survey’ echoes the sentiment. The report states that at present as many as 82% of enterprises are deploying the hybrid cloud strategy compared with 74% in the prior year.
While Virtustream significantly leverages EMC’s hybrid cloud portfolio, the company has also made a number of acquisitions in the broader cloud space in tune with its growth strategy. In the past, this Zacks Rank #3 (Hold) company acquired OpenStack-based cloud provider, CloudScaling along with a backup company, Spanning and data provider, Maginatics to strengthen its cloud business.
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