EMC continues to push beyond the server, acquiring cloud company Virtustream for $1.2 billion

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EMC is one of the more divisive companies in the Boston tech scene. Depending on who you talk to, you are likely to get a different opinion on the multinational data storage giant. The company is one of the largest employers in the state of Massachusetts, so it has a supportive block of employees. However, EMC is also considered the key antagonist in the battle to eliminate non-compete laws enforcement in Mass. It has been very active in legally pursuing — and trying to shut down — startups built by former workers that do anything loosely connected to data storage and IT…so pretty much any high-tech startup.

The company has also been the target of some pretty aggressive activist investor meddling. Elliott Management, which owns a 2.2 percent stake in the company, has been pushing for the data storage company to spin off its cloud virtualization subsidiary, VMware. While EMC may still spin out its security services brand RSA and big data software company Pivotal, a move by the company today to add more cloud-focused services seems like confirmation the EMC has plans to go long in the cloud, a stark move away from the server-based backup and storage services that are its bread and butter.

Today, EMC announced that it has acquired cloud software company Virtustream for $ 1.2 billion in cash. The move shores up the company’s hybrid cloud services, allowing its customers to now store applications and other IT services in the cloud. Virtustream’s services will be packaged as part of what EMC is calling its “Federation Enterprise Hybrid Cloud Solution,” a suite of cloud-focused tools that also includes VMware vCloud Air.

Bethesda, Maryland-based Virtustream is best known for its cloud infrastructure-as-a-service tools and already counts companies like Coca-Cola, Heinz, Hess, and Kawasaki as customers, and has had partnerships with Citrix, SAP, and others. In a statement announcing the news, Virtustream founder and CEO Rodney Rogers said, “We’re proud to be joining the EMC Federation where our combined capabilities, products and services will allow us to accelerate our vision of delivering the platform of record for enterprise systems, and address the complete breadth of cloud computing needs.”

The addition of Virtustream seems to put an end to talk of spinning off VMware — for now — as EMC is going all in the cloud computing space. The large exit may also have other ripple effects; it could serve as a signal that the appetite for cloud IT services may be improving so that other cloud-based service companies that have been waiting in the wings and holding off on IPOs, like Actifio and Veracode, for cloud security, may have a big window of opportunity to cash in on at the moment.

[photo by Bob Mical]

PandoDaily

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