Cisco Buys Into VMware For $150M

Seems high-tech players from all walks of high-tech computing want a piece of VMware, whose pending IPO has been attracting strong interest since it was announced earlier this year.

Networking power Cisco Systems  today became the second company after Intel to invest in the virtualization subsidiary of EMC , plunking down $150 million to own roughly 1.6 percent of VMware’s outstanding common stock.

The stake is designed to fortify collaboration between Cisco and VMware, which are already familiar with one another.

But with corporate customers looking to create greater efficiencies in their datacenters, Cisco and VMware are stepping up to meet those needs by pairing networking and virtualization products.

For example, Cisco earlier this week announced its VFrame Data Center, a platform that provisions computing, storage and network together as virtualized services.

Intended as a complement to VMware’s server virtualization products, Cisco and VMware are planning tighter collaboration between VFrame and VMware Infrastructure later this year.

As another part of today’s investment, VMware and Cisco said in a statement that they inked a “routine and customary” collaboration agreement to expand joint development, marketing, customer and industry initiatives. The idea here is to extend beyond improving datacenter operations to augmenting remote offices and desktops.

VMware has also agreed to consider the appointment of a Cisco executive to VMware’s board of directors down the line.

Cisco’s stake comes a few weeks after Intel’s  investment arm grabbed a 2.5 percent stake for $218.5 million.

Like the new Cisco-VMware pact, that deal was signed to cultivate inter-company collaboration, and to speed VMware virtualization product adoption on Intel architecture.

That deal was exquisitely natural; VMware made its claim to fame virtualizing Windows operating systems running on servers powered by Intel’s x86 processors.

VMware’s IPO appears imminent, with EMC planning to make 10 percent of VMware shares available for public consumption.