Cisco to buy US$150m share in VMware

31 Jul 2007

Global networking company Cisco is heading into the virtualisation market with the impending purchase of US$150m in shares in VMware which will represent 1.6pc ownership in the company.

Cisco said it plans for this investment to speed up customer adoption of virtualisation products together with the company’s network infrastructure.

The company said this deal also heralds a joint effort between VMware and Cisco to “expand co-operative efforts around joint development, marketing, customer and industry initiatives”.

The benefit, Cisco hopes, would be to move beyond the back-end implementation of virtualisation and bring it to remote offices and end-users.

Earlier this month, computer chip manufacturer Intel bought 9.5 million shares in VMware to the tune of US$218.5m.

Although it is obvious why a networking company like Cisco would be keen to get a piece of the virtualisation market, it may seem less clear why Intel would be motivated.

However, it is in Intel’s interest to back VMware because falling prices in processors have increased the company’s motivation to find more outlets such as supplying hardware to a fast-growing market like virtualisation.

By Marie Boran