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Parallels Weighs in On Possible Cisco/VMware Deal

The recent speculation that Cisco is eyeing VMware for a buyout led Parallels CEO Serguei Beloussov to contact me with a response. Beloussov is one of the real smart guys in this industry, with a proven track record going back many years. It's worth listening to what he has to say. Here's his take: 

If there’s any truth to the rumor that Cisco is pursuing VMware, I believe it's unlikely that either VMware or EMC would be sold at the speculated prices. VMware is performing well and growing quickly, so there's no rush to sell when the markets are down. It is also unlikely that EMC would sell VMware separately, as VMware is the main growth engine and largest technology asset for EMC. On the other hand, Cisco is unlikely to want to own EMC's high-end storage business.

With that in mind, if a deal does go through, Cisco will become a dangerous competitor to IBM, HP, Dell and others, which would create complications that need to be considered. However, Cisco has done an amazing job of integrating various assets -- I found its recent integration of telephony companies very impressive. If Cisco did come to own VMware and/or EMC, the IT industry would change a lot, but it would have a positive impact on Parallels, as we're an ideal partner for IBM, HP, and Dell, among others.

Putting aside the P.R. aspects of Beloussov's last sentence, I agree that Cisco will become a chief competitor for some of the large companies mentioned. But more than that, they'll become serious rivals with Microsoft in the virtualization space. I doubt Microsoft would welcome such a move. It's hard enough trying to keep up with VMware as it is; if the huge resources of Cisco are thrown into the mix, that could make keeping up with the Joneses that much harder.

What's your take? As Frasier Crane says, "I'm listening..."

Posted by Keith Ward on 02/18/2009 at 12:48 PM


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