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EMC Gobbles VMware: Page 2 of 2

VMware's server provisioning capabilities could be the missing piece of EMC’s storage virtualization puzzle -- but EMC will need additional development work, too, in order to offer what it views as a complete solution. Specifically, VMware has no distinct program for automatically provisioning certain applications.

“[EMC is] working on things that help you virtualize the data center,” says Forrester Research Inc. principal analyst Frank Gillett. “This is a step on the road, and it takes them in the right direction, but it’s not sufficient on its own. They still need server automation and provisioning.”

Approximately $600 million of the purchase price consists of cash. The deal is expected to be completed early in the first quarter of 2004. EMC expects to take a charge of approximately $15 million to $20 million in the first quarter of 2004 for the value of VMware’s ongoing research and development costs and other integration expenses. EMC expects the acquisition to decrease its earnings per share by $0.01 in the first quarter of 2004. It expects no impact on EPS for the full year in 2004 and expects it to add $0.01 to its EPS in 2005.

VMware was founded in 1998, delivered VMware Workstation in 1999, and entered the server market in 2001 with VMware GSX Server and VMware ESX Server. The company launched VMware VirtualCenter in 2003. VMware claims more than 5,000 corporate customers and two million registered users.

— Dave Raffo, Senior Editor, Byte and Switch