Months after their separation was confirmed, VMware and Dell are now officially two independent companies. Thus ends a stage that began in 2016, when VMware became part of Dell Technologies. The step, seen with good eyes and future prospects for the two companies, will allow both to work with new clients and expand their technologies, while still having very close ties between them.
The spin-off also has financial impacts, as Dell Technologies will divest its 81% stake in VMware, which is publicly traded. In this way, a software company independent of Dell will be born with a market value close to 64,000 million of dollars. Dell’s hardware operations, which he is keeping, are worth about $ 33 billion, based on the last price of his titles.
About two-thirds of VMware’s revenue still comes from the company’s more traditional software divisions, that is, licensing and maintenance services. But the company is taking firm steps toward a cloud-based business model, and expects that by the end of its fiscal year ending in January 2025, 40% of its total revenue will come from subscriptions.
Both companies hope that the division into two independent companies will give them both the financial flexibility to move forward while continuing to grow their business development collaboration, which is very close. That includes services like VMware Cloud at Dell EMC, which combines the integration of network software, as well as VMware compute and storage, with Dell’s Hyperconverged Infrastructure (HCI).
On the other hand, everything indicates that both companies will continue to work together in various sectors, such as the edge, telecommunications and 5G. They are also committed to continuing to drive VMware revenue through Dell’s sales channel, as well as VMware continuing to offer Dell Financial Services.
As stated by the VMware CEO, Raghu Raghuram, the company will be more flexible to partner more deeply with cloud and on-premises providers, in addition to having «more flexibility to use shares to complete future purchases, helping them stay competitive. Today’s step will reinforce our mission to be the Switzerland of the cloud industry, uniquely positioned to provide our customers with the best mix of options as we grow our robust partner ecosystem.«.
Michael Dell, that besides being the Dell President and CEO will continue to form part of the VMware Board of Directors, has stated that «today is an important step for Dell AND for VMware. We unlock significant shareholder value while maintaining our strong agreement on sales, support and innovation for our customers. We move forward at full speed, solving customer problems, driving progress and capturing opportunities in sectors such as multicloud, edge and telecommunications«.
VMware has also distributed a special cash dividend of $ 11.5 billion to all VMware shareholders. Among them is Dell Technologies, which has received 9.3 billion, and which will use the funds received to reduce debt.