14 DAY TRIAL // Cisco Systems announced that it will buy a small share for 150 million dollars in the virtualization expert company VMWare, which is a subdivision of the EMC company. For 150 million dollars Cisco will control about 1.6 of Vmware's shares, but this is less important than the fact that Vmware is the leader of a very hot market segment: the virtualization technology. This technology enables the use of virtual machines on a host computer system. From the user's perspective, the said host system is functioning as if several different machines were present. Of course this technology comes at quite a price, both in terms of money and computing power.
According to several analysts cited by the News.com site, "VMware has about 85 percent market share in the virtualization business at the moment. The market is expected to grow to about $20 billion annually in the next few years". The VMware company is so successful that the parent firm, EMC is ready to "spin off 10 percent of the unit in an initial public offering" on the base that its sales grew 89 percent in a single quarter last year.
Cisco Systems is not the first computer hardware giant that invested in virtualization technology and implicitly in Vmware, as a few weeks ago, Intel decided to buy some shares too for the more consistent sum of 218.5 million dollars. "Cisco, which primarily makes switches and routers that shuttle IP traffic around networks, is interested in VMware because it will help Cisco's corporate customers run their data centers more efficiently. Once the deal is complete, Cisco will have less than one percent of the outstanding voting stock in the company, but VMware has agreed to consider naming a Cisco executive to its board once it goes public" according to the News.com site. The only large rival of Vmware is Microsoft, but its virtualization products were never as popular as the ones from Vmware were.