EMC, Cisco and VCE today announced the next phase of evolution for VCE. Expected to be finalized this quarter, VCE will become an EMC business. Cisco and VMware will continue as strategic partners and investors, with Cisco having an approximately 10% equity interest in VCE. VCE’s charter will focus on simplifying the deployment of hybrid clouds, including a full range of converged infrastructure offerings, applying its unique innovations and expertise to a broad range of hybrid cloud solutions. Under this next phase, VCE will continue to advance new solutions based on its industry-leading Vblock® Systems, which feature best-of-breed technologies exclusively from Cisco, EMC and VMware.
VCE embarks upon this new structure with full support from its original founders Cisco, EMC and VMware. As part of the EMC family, VCE will remain intact under the leadership of CEO Praveen Akkiraju and his senior team with its own mission, operating charter and organizational structure. Underscoring their commitment to VCE customer success are existing and renewed multi-year engineering, resell and support agreements among Cisco, EMC and VCE. As part of EMC, VCE will be an integration point for technologies from across the company.
As one of the industry’s most successful joint ventures, the speed and scale of VCE’s success in pioneering and validating converged infrastructure has been unprecedented, with VCE as the clear leader. EMC, Cisco and VCE jointly determined that this new structure would serve as the optimal model for VCE’s next phase of expansion, innovation, and long-term growth.
VCE surpassed a $2 billion annualized demand run-rate1 for Vblock and Vblock-related products and services exiting Q3 2014, its sixth consecutive quarter of greater than 50% year-over-year demand growth. According to IDC2 , total worldwide spending on converged infrastructure is growing at 32.8% annually and will reach approximately $14.37 billion in 2017 (up from $5.4 billion in 2013). VCE is the clear leader in integrated infrastructure systems according to Gartner3 and IDC4 . Earlier in 2014, VCE was positioned as a leader in the Gartner, Inc. Magic Quadrant for Integrated Systems5 , based on an evaluation of VCE’s completeness of vision and ability to execute.
VCE Vblock Systems are engineered, manufactured, managed, supported, and sustained as a single solution, providing an exceptional customer experience. More than 1,000 enterprises and service providers have deployed over 2,000 Vblock Systems worldwide, realizing significant benefits in speeding application deployments, simplifying operations, increasing availability, and reducing costs. A recent study conducted by IDC revealed that, on average, VCE customers were able to deploy new services five times faster, reduce downtime by 96%, and lower their annual datacenter costs by 50% with Vblock Systems.
VCE’s reorganization and recapitalization, which will result in the acquisition of a controlling interest by EMC, are expected to be completed in the fourth quarter of 2014, subject to customary regulatory approvals, and are expected to have no material impact to EMC GAAP and non-GAAP EPS for the full 2014 fiscal year. Once finalized, EMC will begin reporting VCE financials as part of its consolidated financial statements.