Intel to invest $218.5M in VMware

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VMware, the company that brought virtualization software to the mainstream, today announced its plans to sell 10 percent of the company or 38 million shares in its IPO at a price between $23 and $25 per share, and expects to raise about $741.4 million. The company already secured a whopping $219 million investment from Intel, giving the chipmaker a 2.5 percent stake and a board seat at VMware.

VMware, which was acquired by enterprise data storage company EMC for $635m back in December 2003, has almost doubled its revenue every year and expects the growth rate to continue as just a small fraction of existing servers and business desktop and notebook PCs use virtualization software.

Many companies use only a portion of their computing power. Virtualization lets businesses separate the operating system and application software from the hardware, allowing them to combine multiple servers, storage and networking units into pools of capacity they can allocate wherever it is needed most, boosting the productivity of the machines and cutting overhead costs. Intel is a major backer of the technology since their microprocessors comprise the majority of the systems on which VMware's virtualization products are deployed. In addition to encouraging collaboration to advance VMware adoption on Intel processors, the two companies also committed to expanding their partnership around joint marketing and development initiatives.

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