Watch Out, AWS: Virtustream Deal Begins EMC's Life As A Cloud Provider

EMC has officially stepped into the cloud provider market, closing its $1.2 billion cash acquisition of Bethesda, Md.-based cloud software and Infrastructure-as-a-Service firm Virtustream.

"They don't want everybody to go to AWS," said Kent Christensen, practice director for virtual data center and cloud at Datalink, an Eden Prairie, Minn.-based EMC partner. "They're trying to build something to compete with it."

That strategy comes with risks, Christensen said -- namely, that Virtustream could be a competitor to other EMC federation properties like VMware's vCloud Air. When the Virtustream deal was announced in late May, Raymond James Equity Research analysts wrote that Virtustream could butt heads with vCloud Air "unless there is full product, brand and go-to-market integration between the two federation services."

[Related: EMC Eyes Hybrid Cloud Market With $1.2B Acquisition Of Virtustream]

Still, EMC frequently boasts of its willingness to "disrupt" itself, and the Virtustream acquisition could be an example of that rationale.

Christensen said EMC could successfully differentiate Virtustream as a "high-end" product alongside the more pedestrian vCloud Air.

Jamie Shepard, a senior vice president at Lumenate, a Marlborough, Mass.-based EMC partner, was enthusiastic about the Virtustream sales proposition, which he said keeps things simple for customers used to dealing with perhaps several providers, as well as the billing, metering, management and configuration of whatever systems they buy.

"With Virtustream, we can build in a nice hybrid solution with one sku (so to speak) and one maintenance contract all through EMC eliminating the need for AWS or any third party separate contracts," Shepard told CRN by email.

Shepard said Lumenate is already bringing up Virtustream in talks with cloud migration customers.

The Virtustream portfolio will be sold directly and through partners. The details of those programs will be released later this quarter, an EMC spokesman said. EMC federation service provider partners will get access to Virtustream's xStream cloud management software platform and will be enabled to adopt and deliver their own branded services around xStream.

The move is intended to strengthen EMC's presence in the hybrid cloud market. With Virtustream, EMC can move customers' entire application portfolios to the cloud. Virtustream will join the five other members of EMC's "federation" of companies: EMC Information Infrastructure, VMware, VCE, Pivotal and RSA.

Virtustream also gives EMC access to a network of data centers in the U.S. and Europe and a roster of blue-chip enterprise customers like Coca-Cola Co., Domino Sugar, Heinz, Hess Corp., Kawasaki, Lexmark and Scotts Miracle-Gro.

PUBLISHED JULY 10, 2015