Cisco Invests $150 Million in VMware

Following in the footsteps of Intel, Cisco will acquire 1.6 percent of virtualization company VMware from parent EMC for $150 million in cash. Unlike Intel, Cisco will not receive a board seat, but VMware said it would consider appointing a Cisco executive to its board in the future.

Facing increased competition from Microsoft and newcomer Parallels, the investments will help VMware maintain its lead in the marketplace. Through Intel, VMware now has closer ties to the hardware it virtualizes, and Cisco will work with the company to develop virtualization products designed for networking and datacenters. Both Intel and Cisco stand to gain from the transactions as well once VMware goes public.