The final day of a fascinating EMC World conference came to a close yesterday, and after a record-breaking 75+ guest interviews over the three day event, theCUBE hosts Dave Vellante and Jeff Frick finally took a breather to discuss the concept behind EMC’s federation during their final wrap session.

Vellante kicked off by noting many of the changes EMC had made since it first announced the concept one year ago. He described how EMC has spun off Pivotal, taking out certain assets from the company and putting these into Pivotal and VMware, before later reshuffling some of them around again.

“That’s the value of the federation, you can move things around pretty seamlessly,” noted Vellante. “The other thing the Federation does is it allows EMC to sell up into the organization,” he added, pointing out that just a few years ago EMC was stuck selling to either storage admins or the virtualization admins.

Frick asked Vellante to drill down a little on EMC’s federation concept and why the idea came about, noting that he’s never seen such a large assemblage of companies under one roof.

In Vellante’s opinion, the concept came about as a result of two key events – firstly, there was EMC’s milestone acquisition of VMware back in 2004. As far as VMware was concerned, things were ticking over nicely at VMware in the years following that deal, but the business was somewhat restricted under the EMC umbrella. “They had a rapidly growing business, a very disruptive technology, and so it didn’t make a lot of sense to have that company and that value locked up inside of EMC,” he said. “At the same time, EMC was very forceful, it didn’t want to give up that ownership, and so that’s why they spun it out as a separate company”.

VMware has since become a massive success story for EMC, worth some $40 billion according to Vellante. “About 60 percent of EMC’s valuation is a direct result of VMware’s valuation, and that’s led some people to undervalue the core of EMC,” he noted.

The second event that led to EMC’s federation concept was the departure of one of its key execs, Dave Donatelli. EMC eventually replaced him with one Pat Gelsinger, who of course, went on to take over as CEO of VMware in place of the previous incumbent, Paul Moritz.

“When Pat went to VMware, everyone was asking ‘what’s Moritz doing? Is he going to retire?’”, Vellante recalled. “But it turned out that he was running strategy, and then all of a sudden they announced “we’ve got this federation model””.

Vellante explains that the federation was partly created as a way for EMC to take all of its Big Data-related assets and put them into Pivotal, and create a true Big Data platform. And Pivotal, alongside VMware, is the cornerstone of the EMC federation’s growth right now.

“Look at the growth rates,” explains Vellante. “There’s Pivotal, growing at 40 percent per year, VMware growing at 15-20 percent a year, and then you’ve got EMC, a huge company, growing not that fast at just 1-2 percent, but its throwing off a lot of cash.”

“What EMC is able to do with that cash is pay dividends, buy back stock and finance acquisitions like AirWatch, VMware’s end-user computing play,” he continues. “The federation, to me, is an awesome way to cross the chasm and innovate from a business model standpoint.”

Even so, Vellante acknowledges that the federation has a big challenge ahead of it. He notes that the classic EMC business is huge compared to the others. What this means is that its other businesses have to grow so much faster to offset the flatness and eventual decline of EMC’s core business, Vellante explains. “But EMC buys companies and it invests in R&D,” he notes.

“They’re hitting a groove swing on all cylinders right now at the direction of Joe Tucci, who’s been able to attract some really top notch executives, and that’s my take on the federation.”

Watch the rest of Frick and Vellante’s discussion on theCUBE – EMC World 2014 Final Wrap: