Intel buys US$218.5m stake in VMWare

Intel has agreed to acquire a US$218.5m stake in EMC.

VMWare is the largest provider of server virtualisation technology and over the past years has demonstrated a rapid sales growth. Last year the company increased revenues by 82 per cent to US$703.9m and posted a net profit of US$85.9m.

The virtualisation vendor is a long-time partner of Intel. Intel expects that the transaction will strengthen joint marketing and sales programmes that are designed to accelerate the adoption of virtualisation technology.

Virtualisation allows a single physical server to act as multiple separate units. The technology is considered a major enterprise IT trend. Both Intel and AMD have added virtualisation acceleration technology to their processors.

VMWare in February unveiled plans for a US$949m initiation public offering (IPO) in which parent company EMC will sell off a 10 percent stake in the company. The storage vendor will retain 98 to 99 percent of the combined voting power in the company.

Upon completion of the IPO, the Intel investment will represent a 2.5 percent stake in VMWare. The chipmaker will hold less than one percent of the voting powers and gets to appoint one board member.

The two companies also committed to expanding their partnership around joint development, marketing and industry initiatives.

Intel also is a major backer of Xen, an open source virtualisation technology that ships as part of the Red Hat and Novell Suse Linux distributions. Xen however is considered less mature than VMWare and so far is struggling to gain significant market share.

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