EMC CEO Joe Tucci

Activist investment firm Elliot Management Corp. has written a open letter urging EMC to break up its Federation of companies by selling off VMware Inc.

Elliot Management is believed to have accumulated a 2.2 percent stake in EMC, according to The Wall Street Journal. It’s push to break up the legacy storage giant comes at a time when several other major tech companies have announced plans to reorganize themselves due to the challenges posed by shifts in technology.

In its letter to EMC’s CEO Joe Tucci, Elliot slammed the company for the complex nature of its structure, saying the strategy obscures enormous value. It recommends EMC sell off several of its major assets, the biggest being VMware. Should EMC bow to the pressure, it would join the likes of eBay Inc and Hewlett-Packard Company in downsizing.

EMC’s federation is made up of four core businesses – EMC’s storage unit, VMware’s virtualization business, RSA and its enterprise security, and Pivotal, its cloud-computing arm. As to what the fate of the latter two businesses in the event of a break up, that hasn’t been discussed publicly.

Up until now, EMC has resisted the pressure from Elliot to tear up its federation. “Over the past few months, EMC’s leadership has met with representatives of Elliott several times and has listened carefully to their ideas, as we do with all of our shareholders,” said an EMC spokesperson in response to the letter.

It’s not difficult to see why EMC is resisting any break up. Its Federation strategy is critical to its plans going forward. The software-defined data center (SDDC) is central to VMware’s future growth, yet it relies on EMC’s ViPR as the unifying platform. Should VMware spin off from EMC its SDDC will be much harder, if not impossible, to do. Similarly EMC would struggle without VMware’s SDDC, because this is what gives it leverage to sell ViPR and its XtremIO flash technologies against the competition.

Nevertheless the pressure is building on EMC to do something to line its investor’s pockets, and Elliot Management has a history of getting its own way. It previously bought into Juniper Networks Inc. and forced some major changes there, while its involvement with Iron Mountain Inc. led to the resignation of then CEO Bob Brennan due to a disagreement over the company’s direction.