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Dell’s VMware Spin-off: 5 Big Things To Know

The move to create two standalone companies will preserve the close partnership between Dell and VMware around technology development, sales and marketing, according to Dell Technologies.

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Reasons For The Spin-off

In an interview with CRN last September, Michael Dell said that spinning off VMware would simplify capital structures and boost both companies. “It enhances strategic flexibility and gives both companies more flexibility–while we continue with the mutually beneficial strategic and commercial partnership that we’ve had for many, many years that has worked extremely well,” Michael Dell said at the time.

In a news release Wednesday, Michael Dell said the spin-off will “drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders.”

Thanks to “an even stronger capital structure” following the VMware spin-off, “Dell Technologies is poised to further capitalize on the rebound in infrastructure and PC spend, new cloud operating models driving as-a-service growth, compute moving to the edge, and customers’ longer-term digital transformation initiatives,” the company said in the news release.

Paul Clifford, president of Davenport Group, a longtime partner of Dell and VMware, told CRN that “the two are completely different companies. At the core, they are now trying to unleash VMware to be VMware and Dell Technologies to be Dell Technologies, and at the same time free up cash.”

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