EMC Acquiring Cloud-Computing Startup Cloudscaling

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EMC Corp. has agreed to acquire cloud-computing startup Cloudscaling Group Inc., pushing to make its storage products work better with a set of free software tools.

The deal is for less than $50 million, according to people with knowledge of the situation, who asked not to be identified because the transaction isn’t public. Cloudscaling helps companies manage large numbers of computers that are linked together by OpenStack, a free open-source technology developed by companies including EMC and Oracle Corp. Cloudscaling also designs technology to make it simple to connect computers running OpenStack to so-called public clouds, operated by providers like Amazon.com Inc. and Google Inc.

EMC plans to use Cloudscaling to “further extend our breadth of cloud platform support,” Dave Farmer, a spokesman at EMC, said in a statement yesterday. He added that EMC plans to hold a cloud event on Oct. 28. By making sure EMC’s storage products work well with OpenStack in cloud-computing environments, companies will have more incentive to pair the company’s hardware with the free software.

Cloudscaling Chief Executive Officer Randy Bias didn’t respond to requests for comment.

EMC is making small deals as it explores strategic options that could include a full or partial sale, or a spinoff of VMware Inc., people familiar with the discussions said last month. The Hopkinton, Massachusetts-based storage-technology company is facing the retirement of CEO Joseph Tucci, who is set to step down some time before February, according to the terms of his employment contract. On Oct. 8, activist investor Elliott Management Corp. publicly called for EMC to fully split off its VMware business.

Cloud Flurry

Cloudscaling, founded in 2006 and based in San Francisco, has raised more than $10 million from investors including Trinity Ventures and Juniper Networks Inc.

Technology giants have recently made several purchases of cloud-computing startups. Last month, Hewlett-Packard Co. said it was buying cloud specialist Eucalyptus Systems Inc. Cisco Systems Inc., meanwhile, acquired private-cloud operator Metacloud in late September.

OpenStack was formed in 2010 as a collaboration between Rackspace Hosting Inc. and NASA, which donated technologies developed to support internal products to the open-source community. As companies have sought to compete with Amazon, Microsoft Corp. and Google, they have turned to OpenStack as a way to harness the collective technical resources of the community.

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