EMC buys Cloudscaling as the great cloud consolidation continues

EMC is buying out pioneering OpenStack cloud provider Cloudscaling, making for another big cloud acquisition in recent weeks. The deal is supposedly worth less than $50 million, Bloomberg News reported Monday, citing unidentified sources.

It’s been a pretty open secret that Cloudscaling, was on the market, and earlier this week a source was telling us that EMC was the likely buyer.

The deal is the latest in a series of cloud consolidation moves. Last month Hewlett-Packard bought Eucalyptus to bolster its Helion cloud effort; the following week Cisco bought Metacloud, which offers managed OpenStack services. EMC itself joined the OpenStack foundation two years ago, but hasn’t made much of a splash as yet, so buying OpenStack expertise — and perhaps customers — makes sense.

Given the sheer number of OpenStack players contending for a piece of the cloud computing action there’s been a lot of speculation about which company would be the next to be acquired. Legacy IT players, all of whom are struggling for cloud credibility are looking for key acquisitions to bolster their cloud credibility. Perhaps the bellwether deal was IBM’s $2 billion acquisition of SoftLayer last year.

What EMC gets with Cloudscaling is some impressive tech expertise — founder and CEO Randy Bias is well regarded in OpenStack circles

And, Hopkinton, Mass.-based EMC is no stranger to M&A; Its list of acquisitions is long and varied. But EMC is also on the other side of buyout rumors especially since Elliott Management bought up a ton of shares and is said to be pressuring the company to spin off VMware. EMC now owns about 80 percent of the server virtualization giant. VMware accounts for about 22 percent of EMC revenue.

EMC also reportedly engaged in serious discussions with HP about a merger. Those talks were scotched over concerns of shareholder reaction. Now that HP is splitting off its PCs and printers into a separate entity, there is new talk that HP Enterprise — which includes the company’s cloud, server, storage and networking hardware businesses — might revisit the EMC plan.

Jonathan Vanian contributed to this report