Cisco, EMC, VMware Invested $750M In VCE: Worth the Price?

Over the past two years, SEC documents indicate, Cisco Systems has invested $264 million into VCE — the virtual computing environment that’s also backed by EMC and VMware. Some quick math by The VAR Guy suggests Cisco, EMC and VMware together have invested roughly $750 million in VCE since 2010. So is the investment paying dividends so far? Here’s an educated guess.

First, a refresher course: VCE promotes Vblock for private cloud computing and converged infrastructure — compute, network, storage, management and virtualization in a single platform. Cisco has a a 35% stake in VCE, which is critical to the company’s server and data center push against IBM, HP and Oracle.

Cisco has so far paid $264 million for its 35 percent slice of VCE; quick math therefore suggests the other 65 percent stake in VCE has required a $490 million commitment from EMC and VMware (plus some potential dough from Intel, which also backs VCE). Final piece of math: $264 million plus $490 million equals $754 million pumped into VCE over the past two years.

Investments In VCE Will Continue

And more money for VCE appears to be on the table. A recent SEC filing from Cisco states: “Over the next 12 months, as VCE scales its operations, the Company [Cisco] expects that it will make additional investments in VCE and may incur additional losses proportionate with the Company’s share.”

So is Cisco happy with VCE’s performance so far? Hard numbers are difficult to come by. But anecdotal chatter seems to be upbeat. VCE hit some well-documented bumps in 2011, including some limited layoffs. But during a recent chat with The VAR Guy, Cisco Senior VP Edison Peres spoke highly of VCE as well as Cisco’s relationship with NetApp.

The VAR Guy has a sneaky suspicion that VCE may be hitting its stride… or at least finding some momentum with more channel partners.