VMware backs out of Virtustream plans

VMware was set to join forces with EMC in cloud venture

VMware has walked away from plans to join forces with EMC on new cloud venture Virtustream.

The virtualisation vendor, which is owned by EMC, filed a document with the US Securities and Exchange Commission last night claiming it will no longer take part.

"VMware announced that it will not be participating in the formation of the Virtustream Cloud Services Business previously announced by EMC and VMware on 20 October 2015," said the filing.

Back in October – days after Dell announced plans to buy EMC for $67bn (£44bn) – VMware and EMC introduced the latest member of the Federation family in the form of Virtustream, a joint cloud business.

The plan was to combine the cloud capabilities of EMC, VMware and Virtustream, all under the latter's name. Virtusteam was already an EMC-owned company in its own right before the announcement was made.

EMC said at the time that the new Virtusteam venture would "generate multiple hundreds of millions of dollars in recurring revenue in 2016", and the new venture was a hot topic at this year's VMWorld Europe.

In the filing, VMware said it will update its preliminary 2016 guidance it provided in its last earnings call in light of the change of heart. The company is due to announce its fourth-quarter and full-year results in January, when more information is expected on the move.

Yesterday, the Dell-EMC deal took a step forward as the "go shop" period, in which EMC could look for and accept a better offer, expired.