VMware Inc. and EMC are restructuring Virtustream Inc. to become the new hybrid cloud services business and brand and an independent member of the EMC Federation. As such, writes Wikibon CTO David Floyer,  it is a strategic part of the Federation and, post-acquisition, the new Dell-EMC company should give it a high priority in investment throughout the acquisition process and afterward, even if that means cutting investment in some EMC storage products.

Virtustream, which was originally one of VMware’s forays into infrastructure-as-a-service public cloud, is being expanded to incorporate and align the cloud capabilities of the EMC Information Infrastructure and VMware’s on- and off-premise cloud and hybrid cloud offerings. This makes it vital to the new EMC Enterprise division that Dell plans to create in Hopkinton, MA. The most important strategic challenge for this division will be creating a viable, compelling cloud and hybrid cloud story.

To accomplish that, first Virtustream needs to expand aggressively beyond its SAP SE and SAP HANA core to support other software-as-a-service (SaaS) offerings, Floyer writes. The international market will be the biggest opportunity for Virtustream, and it will need to leverage the combined global reach of Dell and EMC to execute internationally.

Floyer recommends that CIOs keep an eye on Virtustream as a key indicator of the relevance of Dell/EMC/VMware as a strategic IT partner.

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