Pivotal Spin-Off a “Brilliant” Move for EMC + VMware. Profits Ahead

Interlaced data center giants EMC and VMware have teamed up on a fresh initiative that’s boldly positioning them on innovation and monetization.  Appropriately named Pivotal, the brand new collaboration is just one of several major updates for both EMC and VMware these past couple of weeks. Breaking down the market implications and outlining action items for CIOs, analysts Dave Vellante and Stu Miniman from the Wikibon research house lay out the details in a recent segment from the SiliconAngle Network (full video below).

The first item that the two tackle is the announcement of EMC’s new XtremIO lineup, which consists of an all-flash storage array and a set of PCIe cards.  Vellante expects that the array will gain a tremendous amount of traction in the market, but says that that there is work to be done on the server side.

Vellante then explains that the storage vendor’s embeddable SSD cards cannot compete with rivaling products from Fusion-io, the current market leader in flash. The two companies’ hardware is evenly matched, but he points out that the latter firm’s performance-accelerating software puts it ahead of EMC.

The second development that Vellante and Miniman discuss is the recent analyst meeting that EMC and VMware held in New York a few days ago. Executives from both vendors attended the event and revealed new details about the Pivotal Initiative, an upcoming joint venture that will focus on cloud computing and Big Data.

Pivotal will be responsible for managing high potential assets that the companies couldn’t proprely monetize internally:  Greenplum, Cloud Foundry, Spring, and a number of other projects. Vellante says that the spin-off is a “brilliant” move, and explains why:

“By doing that they increased VMware’s operating margin, make them more profitable [and] get them more focused – cause it was kind of fuzzy Stu, there was some [developer] backlash there. And they create this incremental value that can now be counted, and very importantly they can incentivize employees and tie them to the growth of the Pivotal Initiative, and not have them lost in VMware or even EMC. From that standpoint, I think the Street really likes it.”

For the full analysis, including an in-depth discussion of EMC’s product strategy, VMware’s channel relations and the long-term value of Pivotal, check out the video below.