The fierce competition in the infrastructure-as-a-service market is driving consolidation even among established vendors. VMware Inc. today sold its vCloud Government Service, the part of its hosting platform geared toward public sector customers, to data center operator QTS Realty Trust Inc. for an undisclosed amount.

The move comes less than a year after rumors first surfaced that the hypervisor maker is scaling back its infrastructure-as-a-service business. One of the main reasons is that vCloud Air has been struggling to gain ground against entrenched providers like Amazon, largely because of its late entry into the market and relatively limited feature set. VMware implicitly acknowledged the lackluster customer demand last month by introducing a new virtualization offering that provides support for several rivaling public clouds.

The sale of the vCloud Government Service is further indication that the vendor is losing interest in taking up the fight against Amazon, Microsoft and the industry’s other infrastructure-as-a-service giants. But since VMware is currently still offering its services to commercial organizations, it’s likely that other factors were involved in the decision too. Public sector sales may have underperformed compared to other segments. And there’s also a chance that the deal was influenced by the recently completed merger of VMware parent company EMC Corp. into Dell Technologies Inc., which has been aggressively trimming operations lately.

Either way, selling off the vCloud Government Service will help the technology giant cut costs while freeing up VMware to focus on more promising businesses. And QTS Realty Trust, for its part, gains valuable new customer accounts through the deal. The transition should go fairly smoothly since, as Data Center Knowledge noted, the company has been hosting vCloud Government Services on behalf of VMware since last year. It will now be take control of sales and channel operations as well.

QTS Realty Trust reportedly plans to integrate the offering into its Government Cloud business and add new features, most notably extra connectivity options for agencies that want to link their networks directly to its infrastructure.

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