VMware is a software company which pioneered the virtualization market by allowing users to run multiple operating systems as virtual machines on a single machine. They have been a market leader in this space for over 20 years. In 2016, Dell Technologies acquired EMC Corporation, VMware’s parent company at the time, in one of the largest technology mergers ever valued at $67 billion. This article looks at the details of this acquisition and what it means for VMware.
A Brief History of VMware and EMC
VMware was founded in 1998 and launched their first product, VMware Workstation, in 1999 which allowed users to run multiple operating systems on a single PC. Over the next few years they focused on server virtualization products
EMC Corporation acquired VMware in 2004 in a deal worth $625 million. EMC was a data storage solutions company and VMware perfectly complemented their products and allowed them to offer end to end solutions to their customers. VMware operated as an independent subsidiary under EMC.
Over the next decade, VMware continued to dominate the virtualization market, especially in enterprise environments while EMC was one of the leaders in the storage market.
Dell Acquires EMC (and VMware)
In October 2015, Dell Inc announced that it will acquire EMC in a cash and stock deal valued at $67 billion. This brought together Dell’s strength in the PC and server market and EMC’s market leading presence in the storage and virtualization market. As part of EMC, VMware was also acquired by Dell.
However, unlike other mergers where the parent company is acquired entirely, EMC shareholders received a tracking stock linked to a portion of EMC’s holdings in VMware. The tracking stock is named Class V stock which essentially tracks the performance of VMware as an independent company.
What This Means for VMware?
Post acquisition in late 2016, VMware has continued to operate as an independent software subsidiary of Dell Technologies. They have retained their brand name, product portfolio, own stock and board of directors.
The key takeaways are:
VMware brand and products continue unchanged
VMware will operate largely independently
There is little to no product overlap between VMware and Dell
Acquisition provides financial support for VMware’s R&D
Access to Dell’s hardware can further innovation in virtualization
Acquisition firmly positions Dell as an end-to-end IT solutions provider
The synergies between Dell and VMware in terms of complementary products and merged R&D capabilities have greatly benefited VMware’s continue growth. In FY22, VMware recorded annual revenue of $12.8 billion.
Some analysts argue that this independence limits some synergies of the merger but Dell Technologies stands by the decision to provide independence to their strategically significant subsidiary.
Overall the acquisition has had little impact on VMware’s customers and products which continue to lead the virtualization market. The parent owners in EMC and now Dell Technologies have played a more financial role solidifying VMware’s finances for continued growth.
In 2016, Dell acquired EMC Corporation (VMware’s parent owner) for $67 billion
VMware operates independently as a subsidiary of Dell Technologies
There is little to no product overlap between Dell and VMware
VMware has access to better R&D budgets and Dell hardware
The VMware brand, products, and team remain independent
The acquisition provides stability and future growth opportunities
The 2016 deal worth $67 billion which saw Dell acquire EMC consolidated two leaders in the technology space and created what Dell calls an ‘end-to-end’ IT giant. As part of EMC, VMware became a part of Dell Technologies but continue to operate largely independently. They retain their own stock, brand, products and leadership which sees little interference from parent company Dell Technologies. This independence comes from the fact that VMware stock is tied to a tracking stock separate from Dell’s public ownership. For most practical purposes, there is little change in VMware except now they have access to better R&D budgets and Dell hardware advancements furthering their virtualization products while also providing Dell direct access to software side of the solutions business. This had led to continued market dominance for VMware more than 7 years after the acquisition showing it has benefited both companies.
Frequently Asked Questions
Q1: Who acquired VMware?
A1: In 2016, Dell Technologies acquired EMC Corporation of which VMware was an independent subsidiary. So effectively Dell Technologies is now parent owner of VMware.
Q2: Is VMware owned by Dell?
A2: Yes, Dell Technologies owns VMware through its 2016 acquisition of EMC, VMware’s then parent company. This $67 billion acquisition saw one IT giant, Dell, acquire another IT leader EMC, which owned VMware at the time.
Q3: Is VMware independent of Dell?
A3: To a large extent VMware operates independently of its parent company Dell Technologies post acquisition in 2016. It retains its own stock, brand name, portfolio, leadership and employees with minimal involvement from Dell Technologies.
Q4: What company bought VMware?
A4: Dell Technologies acquired VMware in 2016 worth $67 billion through its acquisition of EMC Corporation which owned VMware at the time. It brought together two IT market leaders.
Q5: Who now owns VMware?
A5: Dell Technologies wholly owns VMware through its parent subsidiary EMC. After acquiring EMC in 2016 for $67 billion, Dell Technologies is now the parent owner of VMware in which it holds majority share and voting control.
Q6: Is VMware now owned by EMC?
A6. No, EMC itself was acquired by Dell Technologies in 2016. So post acquisition, Dell Technologies now wholly owns EMC and its subsidiary VMware.
Q7: What percentage of VMware does Dell own?
A7: After acquiring EMC in 2016, Dell Technologies wholly owns VMware through this $67 billion merger deal. While it trades under a separate stock from Dell, it holds voting majority control in VMware.
Q8: How much did Dell pay for VMware?
A8: Dell Technologies paid $67 billion to acquire EMC which gave them majority control of VMware as well. So while no direct amount paid exclusively for VMware, the $67 billion includes complete ownership of VMware assets.
Q9: Is Dell EMC the same as VMware?
A9: No Dell EMC and VMware operate as independent subsidiaries under parent company Dell Technologies post EMC acquisition in 2016. Dell EMC focuses on storage and cloud solutions while VMware is the virtualization software products company.
Q10: Does Dell own VMware stock?
A10: Yes, Dell Technologies wholly owns VMware including holding VMware tracking stock shares after the EMC merger. These trade under ticker VMW allowing certain performance related independence.
Q11: Who is VMware’s parent company?
A11: Dell Technologies is the parent company for VMware after acquiring its former parent EMC for $67 billion in 2016. The merger saw Dell absorb all of EMC’s assets including wholly owning its subsidiary VMware.
Q12: Is VMware separate from Dell?
A12: VMware operates independently under parent owner Dell Technologies post acquisition in 2016. It retains its own branding, portfolio, stock and leadership which see minimal involvement from Dell.
Q13: What companies fall under Dell Technologies?
A13: The major companies under Dell Technologies post EMC acquisition are Dell, Dell EMC, VMware, Secureworks, Virtustream and RSA Security. Of these VMware operates most independently.
Q14: Does VMware report to Dell?
A14: No. After the 2016 merger VMware continues to operate independently as a separate subsidiary under Dell Technologies with its own leadership, finances and direction.
Q15: What does the acquisition mean for VMware?
A15: It means new opportunities from more R&D funding by Dell and access to new products for further virtualization innovation. The merger provides financial stability but there is little direct change in VMware operations.
Q16: How has the Dell acquisition affected VMware
A16: VMware continues to dominate the server virtualization market showing that the acquisition has not impacted products or market share. Indirect benefits from better funding and hardware access may further VMware’s lead.
Q17: Is buying VMware a good idea?
A17: Yes, VMware continues to lead in its core virtualization offerings and now has the financial stability of a larger parent organization. For customers and users, this has limited impact while growth opportunities expand.
Q18: What does VMware do for Dell?
A18: Direct access to the virtualization software market along with Dell’s hardware business allows Dell Technologies to offer a wider range of IT solutions and capture more opportunities.
Q19: When did Dell spinning off VMware?
A19: Dell has not spun off VMware and it continues to operate as an independent subsidiary under the majority ownership and voting control of parent company Dell Technologies post 2016 EMC acquisition.
Q20: Why is VMware stock separate?
A20: It allows VMware performance metrics to be judged independently through its tracking stock VMW while also providing some operational independence. Dell Technologies however retains voting control as majority shareholder.