What is VMware’s Long Road to Freedom in 2021

As far back as early 2018, the two companies confirmed that Dell Technologies, which already owned 81% of VMware, might just buy the virtualization giant outright. Of course, that option didn’t pan out, and Dell Technologies ended the year as a private company (again). But that didn’t stop the on-again, off-again talk of a possible merger — or a sale of what has arguably been Dell Technologies’ crown jewels for the past several years and is key to its cloud strategy. Those whispers continued into 2019. And well into 2020. It wasn’t until earlier this spring that the companies announced they’d reached a deal to create two separate companies but preserve their "strategic partnership." Here’s a look back at some of VMware’s milestones on its road to freedom in 2021. Under the terms of the agreement, VMware agreed to pay a cash dividend of between $11.5 billion and $12 billion to all VMware shareholders, ranging from $27.43 to $28.62 per share. Dell Technologies received a dividend of between $9.3 billion and $9.7 billion that the company will use to pay down its debt. Under the terms of the agreement, VMware agreed to pay a cash dividend of between $11.5 billion and $12 billion to all VMware shareholders, ranging from $27.43 to $28.62 per share. Dell Technologies received a dividend of between $9.3 billion and $9.7 billion that the company will use to pay down its debt. Additionally, Dell Technologies’ stockholders got a distribution of VMware shares held by Dell Technologies, and Michael Dell and Silver Lake Partners continue to own direct interests in VMware. And finally, the two companies agreed to a five-year commercial agreement that essentially gives Dell Technologies continued access to VMware technology. Specifically, they agreed to continue to collaborate on several products: their market-leading infrastructure, VMware Cloud on Dell EMC, and SD-WAN, along with other areas including security, telco, and edge computing. In addition to working out the details of its post-Dell Technologies plan, VMware spent almost half of 2021 hunting for a new chief executive to replace Pat Gelsinger, who left VMware earlier this year to return to Intel as its CEO. In May, the company’s board of directors selected Raghu Raghuram, who most recently was VMware’s COO of Products and Cloud Services, to fill the role. The virtualization giant also announced that Sanjay, VMware’s COO for customer operations, "made the personal decision" to leave the company after seven years with the company. Both Raghuram and were considered for the chief executive post. Almost immediately—before he even took over as CEO—Raghuram started talking about his intent to turbocharge VMware’s multi-cloud strategy and how the Dell Technologies spinoff would accelerate this push. On VMware's first-quarter fiscal 2022 earnings call, Raghuram said, "We are at the dawn of this multi-cloud era of computing where enterprises have the sovereignty to deploy their digital assets where it best fits their business." In addition to propelling VMware toward its goal of being the "Switzerland of multi-cloud," the spinoff would allow vendors that are "competitors of Dell to now look at VMware in a new light and say, ‘hey, we can do strategic things with VMware,’" he said at a technology conference. But the commercial agreement also maintains VMware’s cozy relationship with Dell Technologies, he added. "Post-spin, we’ll be in a best-of-both world situation."