VMware nears completion of $67B merger

SAN FRANCISCO — VMware CEO Pat Gelsinger has plenty on his plate.

As head of the $7 billion maker of virtual-storage software, he's smack dab in the middle of tech's largest merger ever, Dell's $67 billion marriage with data-storage company EMC. EMC owns about 80% of VMware.

While the blockbuster sale takes EMC private, VMware remains a publicly-traded unit of Michael Dell's holding company, Denali. The deal is expected to close after a shareholders' vote on July 19.

Gelsinger firmly believes the mega-merger will lead to new market opportunities that could quadruple VMware's annual sales. "It's a wow deal," he says. "Things have gone amazingly smoothly."

Shares of VMware have been on an upswing since April, when it reported first-quarter sales that were slightly better than Wall Street expectations and issued a second-quarter sales forecast that may beat analysts' estimates.

In a far-ranging 30-minute interview at USA TODAY's bureau here today, the Silicon Valley veteran ruminated on how VMware has not only changed the field of virtualization software but is in prime position to help usher in cloud computing on an even deeper scale for corporations.

He also weighed in on several hot topics in the tech world:

— A tech bubble? Gelsinger doesn't buy into the growing sentiment that tech is headed for a calamitous meltdown. He suggests a cooling market and tepid IPO climate have brought unicorns — private start-ups valued at $1 billion or more — have been "brought back to Earth."

An increasingly sober financial environment might mean scaled-back operations and lower valuations in the short term but more stable companies with bigger IPO upsides, he says.

— Apple and innovation. Apple doesn't create groundbreaking technology as much as it redefines it for consumers, Gelsinger says. Case in point: iPod, which was "a great innovation," he says.

"There were 53 MP3 players, but Apple, with iPod, consumerized it, industrialized it, and popularized it," he says.

— Amazon Echo. The voice-activated device is in "its gestation phase" and "it's going to get pretty good," says Gelsinger, one of the architects of Intel's 486 chip in the mid-1980s. "Funny story, I was told back then it was important to (eventually) make the chip" AI-ready, he says. "It shows it can take 30 years for a technology to become marketable."