VMware, Dell split to form independent firms

VMware and Dell say separating gives both companies financial flexibility but lets them continue to grow their technology-development partnership.

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After many months of wrangling, Dell Technologies says it is spinning off its ownership of VMware to create two standalone companies.

While it gives both companies more financial freedom, the new relationship should have no immediate effect on enterprise customers, but that could come down the road.

Dell has had an 81% equity ownership of VMware since its 2016, $67 billion purchase of  EMC, which owned VMware. Under terms of the planned spin-off, VMware will distribute a cash dividend of $11.5 - $12 billion to all VMware shareholders, which includes about $9.7 billion to Dell Technologies, the companies stated.

The companies said they expect the spinoff will give both companies financial flexibility while letting them continue growing their tight business-development partnership. That includes services such as VMware Cloud on Dell EMC, which combines VMware’s high-performance compute, storage, and networking software integrated with Dell EMC hyperconverged infrastructure (HCI). Specifically, it involves VMware vSphere, vSAN, and NSX and Dell EMC VxRail HCI delivered as a service managed by VMware.

In addition to continuing to jointly develop technologies, they will work together in new areas including edge, telco, and 5G, according to the spin-off arrangement. There is also a commitment to continue driving VMware revenue through Dell’s sales channel and continue VMware offering Dell Financial Services, the companies stated. 

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