Cisco veteran named VCE CEO

By Chad Berndtson, on Jul 20, 2012 8:04 AM
Filed under Communications

Is the joint venture profitable?

VCE, the joint venture of Cisco and EMC focused on the tightly integrated converged data centre stack Vblock, has appointed 19-year Cisco veteran Praveen Akkiraju as its new CEO. 

The former general manager of Cisco's Services Routing Technology Group will join VCE as an "extension" to the VCE management team that already includes President Frank Hauck, who also is joining the VCE board.

VCE has been without a CEO since company Chairman Michael Capellas moved out of the CEO position he was named to in 2011 and into his current role.

"As the company continues to accelerate its business, product and market expansion, Praveen brings an ideal combination of business and technical experience that will enable VCE to meet growing customer demand for its products and solutions," Capellas said in a statement.

VCE was formed in 2009 as a joint venture of Cisco and EMC with buy-in from VMware and Intel. Its product is the Vblock, a prevalidated, vendor-approved stack consisting of various Cisco server and networking, EMC storage and VMware virtualisation products and services.

Solution providers working with VCE -- it had 153 partners as of May 2012 -- chase Vblock deals and pass along customer requirements to VCE, which builds the infrastructure according to those requirements and promises delivery of the full "data centre in a box" in 30 days.

Akkiraju's hire is significant in that it marks the first instance of a major Cisco executive stepping in at a company management team heavily dominated by former EMC executives.

In interviews with CRN last July and this past spring, Rob Lloyd, Cisco's executive vice president, worldwide operations, said Cisco would be taking a more active role in managing VCE and would continue to invest in the venture.

Is VCE making money?

VCE currently has 1200 employees and an annualised order run rate approaching $US1 billion, although it hasn't disclosed much about its actual revenue.

According to regulatory filings, EMC invested $US383.2 million in VCE during its fiscal 2011 and recognized $US133.9 million in VCE revenue for the year, with a cumulative loss on the venture of $US253.8 million over a three-year period.

As of its fiscal second-quarter 2012, Cisco, which has a 35 percent stake in VCE, had made a cumulative investment of $US264 million with a $US165 million share of VCE's cumulative loss.

Both EMC and Cisco have maintained that looking at VCE's numbers as losses is deceptive. VCE's costs show up as operations expense lines in their balance sheets, but with the company set up as a joint venture, both parents recognise revenue from sold Vblocks on their respective P&Ls.

"The profit and revenue flow back through the parents," EMC CEO Joe Tucci told CRN in May. "So therefore, the more successful VCE is, in theory, the more money they'll lose. But what we do, underneath it all, is keep a management P&L. If we were losing that much money, we wouldn't doing it."

This article originally appeared at crn.com

 
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Cisco veteran named VCE CEO
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