NEW YORK: Cisco Systems Inc, the world’s biggest network equipment maker, and EMC Corp, the leading data storage company, are increasingly encroaching on each other’s turfs, in a sign their long partnership may be unraveling.
Cisco and EMC have for years collaborated on designing, marketing and cross-selling their products, choosing to go after corporate customers as allies instead of competitors. In 2009, they set up the VCE joint venture as a one-stop shop for data centers, bundling Cisco’s networking equipment and servers with EMC’s storage gear and software from EMC’s VMware Inc. subsidiary.
VCE has yet to turn a profit after three years, and relations between Cisco and EMC show signs of fraying, according to people familiar with the companies.
Cisco has had internal discussions in the past year about making its own move into the storage market by acquiring one of EMC’s competitors, according to one source. EMC has also considered partnering with or buying Cisco’s smaller networking rivals, other sources said.
And in July, when EMC’s VMWare announced plans to buy network technology start-up Nicira, Cisco was taken aback. Cisco had been eyeing Nicira as well and thought it had sealed a $750 million deal for the private company before VMware unexpectedly swooped in, people familiar with that deal said.
“There’s no growth to speak of in the technology market. The only way they can grow is to grab share by stepping on somebody else’s toes,” said Fred Hickey, editor of The High-Tech Strategist newsletter, which is widely read by investors.
When asked for comment, representatives for Cisco and EMC said they were committed to their partnership. They declined to confirm or deny if they had plans to acquire or partner with other technology companies.
“EMC and Cisco remain partners and will continue to shape the future of the data center through a broad relationship spanning many strategic areas,” said a Cisco spokesman.
“EMC is thoroughly committed to the strength and longevity of our Cisco partnership,” said an EMC spokesman.
Officials with VMware did not respond to a request for comment. EMC owns 80 percent of VMware, while Cisco has a small 5 percent stake.
As corporations cut back on IT spending in a weak global economy, experts said technology companies realized that they need to have comprehensive product offerings to drive growth.
Companies are increasingly looking to buy their technology in bundles in what is known as converged infrastructure, rather than purchasing items a la carte to assemble themselves. That has led to a wave of mergers and acquisitions, such as Hewlett-Packard Co’s
Cisco and EMC have long had an amicable relationship, with EMC CEO Joe Tucci, 65, and Cisco CEO John Chambers, 63, sharing a personal friendship that dated back more than 20 years to when they worked at the now defunct Wang Laboratories.
So when Chambers was asked on a conference call how VMware’s acquisition of Nicira would affect Cisco, his unusually sharp tone raised the eyebrows of analysts. Chambers said the partnership with EMC has been strong, but he also made clear that Cisco would not shy from competition.
“We are going to be an open player, and we’ve shown in the marketplace when we compete, we can be really, really tough,” Chambers said.
The increasing competition between Cisco and EMC raises questions about the future of their loss-making joint venture VCE, which stands for Virtual Computing Environment and last month named Cisco veteran Praveen Akkiraju as its CEO.
He said he has begun to outline a strategy to guide the venture over the next two to three years that includes new products with intellectual property that VCE will develop on its own.
“We are a hyper growth company with tremendous opportunity requiring a lot more structure and focus,” he said.
EMC and Cisco have invested about $870 million in VCE, and own 58 percent and 35 percent stakes, respectively. VMware and Intel Corp. are also minor investors in VCE.
VMware and Intel did not return calls seeking comment.
Cisco and EMC have become less interested in VCE because they have come to believe that they need to develop their own products, rather than rely on the partnership, said Kaushik Roy, principal with Hercules Technology Growth Capital, a large venture capital firm.
Roy said that in the future customers will want to buy their technology from a single company rather than a joint venture that sells equipment from several manufacturers.
EMC, whose market value of $ 55 billion is nearly half that of Cisco’s $103 billion, has already started to strike out on its own.
Earlier in August, EMC forged a partnership with hardware maker Lenovo Group Ltd. <0992.HK>, pushing it into the server market.
But it was VMware’s Nicira deal that really hit home, according to sources. They said Cisco had initially offered about $600 million for the startup founded in 2007, and believed it had completed negotiations when the two parties signed a term sheet in July valuing Nicira at about $ 750 million.
On July 23, Nicira announced it was selling itself to VMware for double the price. It was not clear if VMWare knew it was bidding against Cisco.
Several technology bankers, executives and analysts said EMC separately could consider partnering with or acquiring networking technology from Cisco’s competitors, including privately held Arista Networks, Brocade Communications Systems Inc. and Juniper Networks Inc. All the companies have business ties with EMC.
A spokeswoman for Arista said it is building an independent company and does not comment on M&A speculation. Brocade and Juniper declined to comment. A source familiar with the matter said there are no active M&A discussions between Juniper and EMC.
For its part, Cisco is also reaching out to EMC rivals. The networking company recently signed a deal to bundle flash storage from Fusion-io Inc. with Cisco servers. Fusion-io has a similar deal with storage firm NetApp Inc, a fierce rival of EMC.
“Why is Cisco using Fusion-io when it has this JV with EMC?” said Maynard Um, an analyst at Wells Fargo Securities. “Connect the dots — you have Cisco servers, networking, with Fusion-io and they work with NetApp boxes.”
Technology bankers and industry executives speculated that if Cisco wanted to make a big move into storage, NetApp would be a good fit. They said Cisco might also consider Citrix Systems Inc. or Red Hat Inc, which compete with VMware in selling virtualization software that boosts the efficiency of servers. NetApp, Citrix and Red Hat declined to comment.
Cisco, EMC partnership turning into rivalry
Cisco, EMC partnership turning into rivalry
Multilateralism strained, but global cooperation adapting: WEF report
DUBAI: Overall levels of international cooperation have held steady in recent years, with smaller and more innovative partnerships emerging, often at regional and cross-regional levels, according to a World Economic Forum report.
The third edition of the Global Cooperation Barometer was launched on Thursday, ahead of the WEF’s annual meeting in Davos from Jan. 19 to 23.
“The takeaway of the Global Cooperation Barometer is that while multilateralism is under real strain, cooperation is not ending, it is adapting,” Ariel Kastner, head of geopolitical agenda and communications at WEF, told Arab News.
Developed alongside McKinsey & Company, the report uses 41 metrics to track global cooperation in five areas: Trade and capital; innovation and technology; climate and natural capital; health and wellness; and peace and security.
The pace of cooperation differs across sectors, with peace and security seeing the largest decline. Cooperation weakened across every tracked metric as conflicts intensified, military spending rose and multilateral mechanisms struggled to contain crises.
By contrast, climate and nature, alongside innovation and technology, recorded the strongest increases.
Rising finance flows and global supply chains supported record deployment of clean technologies, even as progress remained insufficient to meet global targets.
Despite tighter controls, cross-border data flows, IT services and digital connectivity continued to expand, underscoring the resilience of technology cooperation amid increasing restrictions.
The report found that collaboration in critical technologies is increasingly being channeled through smaller, aligned groupings rather than broad multilateral frameworks.
This reflects a broader shift, Kastner said, highlighting the trend toward “pragmatic forms of collaboration — at the regional level or among smaller groups of countries — that advance both shared priorities and national interests.”
“In the Gulf, for example, partnerships and investments with Asia, Europe and Africa in areas such as energy, technology and infrastructure, illustrate how focused collaboration can deliver results despite broader, global headwinds,” he said.
Meanwhile, health and wellness and trade and capital remained flat.
Health outcomes have so far held up following the pandemic, but sharp declines in development assistance are placing growing strain on lower- and middle-income countries.
In trade, cooperation remained above pre-pandemic levels, with goods volumes continuing to grow, albeit at a slower pace than the global economy, while services and selected capital flows showed stronger momentum.
The report also highlights the growing role of smaller, trade-dependent economies in sustaining global cooperation through initiatives such as the Future of Investment and Trade Partnership, launched in September 2025 by the UAE, New Zealand, Singapore and Switzerland.
Looking ahead, maintaining open channels of communication will be critical, Kastner said.
“Crucially, the building block of cooperation in today’s more uncertain era is dialogue — parties can only identify areas of common ground by speaking with one another.”
