Dell is Spinning Off VMWare

Posted on April 15, 2021 by Paul Thurrott in Cloud, Hardware with 10 Comments

Dell announced that it will spin-off VMWare but will continue to partner with and co-engineer solutions with the soon-to-be separate company.

“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” Dell chairman and CEO Michael Dell said. “Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers. At the same time, Dell Technologies will continue to modernize its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge, and telecom.”

VMWare became part of Dell five years ago when Dell acquired VMWare’s parent company, EMC, for $67 billion. And though VMWare has been Dell’s best-performing business unit since then, the EMC acquisition has saddled Dell with debt. So as part of the spinoff, Dell plans to receive a payout of up to $9.7 billion, while its shareholders will receive up to $12 billion in special cash dividends. Dell says it will use the net proceeds from the sale to pay down its debt.

Dell expects the transaction to close by the end of 2021. Michael Dell will remain chairman and CEO of Dell and chairman of the VMware board. Zane Rowe will remain interim CEO of VMware, and the VMware board of directors will remain unchanged.

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Comments (10)

10 responses to “Dell is Spinning Off VMWare”

  1. bettyblue

    VMware is the king of VM tech, especially at the corporate level. Hyper V never made in real ground as it was always playing catch up and once you clustered hosts they ride on the rickety Microsoft clustering service.

    All that said VMware is mostly on-prem and with everything moving to the cloud it will slowly fade over time. Hyper V will be the leader because Azure uses it for basically everything.

    • Aaron44126

      VMware isn't necessarily strictly on-prem...

      My company basically set up our own "cloud" at four different data centers and it is a fully VMware setup. For more elastic computing it makes a lot of sense to move workloads to AWS or Azure, or for companies that just don't want to deal with the physical infrastructure, but there will always be those that want full control over their tech operation and VMware will be a strong contender in that space.

    • will

      In reply to bettyblue:

      While I can not for sure say how large one company is over another I know that Nutanix has been growing very, very fast and I believe they may be king if you will of HCI? Several companies and organizations around me have been moving from VM to Nutanix. Some are still with VMware for the Hypervisor, but several have been moving to the Nutanix HV for features and costs.

  2. will

    Interesting. I am curious if we will see other companies spin off some mergers, not just tech companies. It all comes down to what will drive growth and profits.

  3. bkkcanuck

    Yay, I preferred the old VMWare -- and we may never have the one from my memory back ... I am hopeful that it will leave them with their entire focus on VMs (gut feeling).

  4. fishnet37222

    As long as they keep making VMWare Workstation, I'll be happy.

  5. bluvg

    "as well as VMware"

    But really, it's more just good for us.

    I'm always amused when calling Dell sales reps and they report they're having computer problems or slowness. It happens surprisingly often.

  6. winbookxl2

    That what happens when your business is top-heavy, glad they made it a separate company but acting like its parent company.

  7. addages9

    In reply to blue77star:

    and yet Hyper-V is the platform underpinning Azure. A huge global cloud platform. It isn't that much of a joke. In my opinion and of course it is just my opinion, and having dumped VMware for Hyper-V, we're much happier and have more robust platforms as a result.

  8. solomonrex

    All of Dell's biggest news seems to be financial engineering nonsense. Took themselves private, took themselves public. Acquired VMWare, spins off VMWare. Acquired Alienware. Billion dollar payments from Intel were hidden a decade ago. The last really interesting things I can recall from Dell is when their web store branched out into consumer electronics briefly, including a short-lived ipod rival (immortalized in a close-up in Ocean's 12).

    With Microsoft closing up shops, one wonders if any of the other OEMs will try Brick and Mortar stores again (in America), like Amazon and Apple. There must be opportunity there, as Best Buy has continued on during a pandemic and all-online Amazon has been investing in it. I suppose they already abandoned the consumer market, and rather than correcting that, MS is sliding away as well.