By Robert Hackett and Adam Lashinsky
August 19, 2015

Paul Maritz, the ex-Microsoft executive who ran closely held Pivotal Software, stepped down as CEO Tuesday. On its own, the news isn’t earth shattering. Maritz will stick around as executive chairman. His successor is a Pivotal co-founder.

Potentially more interesting is what might happen next at the triad of companies known as the EMC “federation.” The three—EMC, VMware, and Pivotal—form three separate but interlocked entities. EMC owns nearly 80% of publicly traded VMware, which it bought in 2004. The two together own Pivotal, which makes various software programs used by coders to develop yet more software. (I wrote about Maritz and Pivotal last year as the newly formed company ramped up.)

EMC’s decision to control VMware but at arm’s length was brilliant. It allowed the faster-growing acquired company to trade at a much higher relative valuation than its parent. Now both companies are slowing, and at least one prominent Wall Street analyst believes EMC will bring all the companies into the fold. “A stand-alone EMC, a stand-alone VMware, and a stand-alone Pivotal would, in our opinion find it difficult to compete,” writes Maynard Um of Wells Fargo Securities. Whereas VMware thrived by selling to EMC competitors like HP and Cisco, those companies increasingly are competing with both companies now, removing one of the benefits of separation.

An irony of any move by EMC to unify its federation is that other companies seem prepared to follow EMC’s earlier moves. Egon Durban, the private-equity investor at Silver Lake Partners, which controls Dell, recently said the computer maker might “securitize” some Dell units that could command above-market multiples. This would allow Silver Lake to earn a return on its investment without Dell itself trading publicly. The rationale for such a potential move, said Durban: to emulate EMC.

Adam Lashinsky

@adamlashinsky

adam_lashinsky@fortune.com


TOP NEWS

Fortune presents the fastest-growing companies in the U.S. These 100 public companies have the best three-year profit, revenue, and stock growth. This year, oil and gas companies took a hit while new entrants like Facebook—once believed to have no profit model—appeared for the first time. (Fortune)

PayPal makes first post-eBay acquisition. The digital payments giant has bought Modest, a startup headed by the former chief technology officer of President Obama’s 2012 re-election campaign. Modest helps merchants build mobile apps, and PayPal is particularly interested in the company’s embeddable “buy” buttons. (Fortune)

We’ve hit peak self-driving cars. Research firm Gartner’s 2015 hype cycle for emerging technologies places autonomous vehicles at the pinnacle. All major automakers have a plan to eventually roll them out. (Gartner)

Hackers out Ashley Madison users. The attackers who targeted Avid Life Media and its adultery website have apparently dumped a massive amount of data online, including names, hashed passwords, partial credit card numbers, and sexual preferences for 33 million accounts. (Ars Technica)

Facebook beats Google as news referrer. Social referrals drive more traffic to news outlets than do search referrals, according to data collected by the analytics service Parse.ly. Although Facebook has beaten out Google in the past for the top title, it has never done so by so wide a margin. (Fortune)

Airbnb seeks China expansion. The multi-billion dollar home rental startup is taking a cue from the professional network LinkedIn. In order to make headway in the Chinese market, the company will scout for a separate chief executive to handle local operations. (New York Times, Airbnb blog)

Alibaba and Foxconn invest $500 million in Snapdeal. The Indian e-commerce company is now valued at $5 billion. EBay, which took a stake in Snapdeal back when it was worth $250 million, has cashed in part of its early investment to beef up its own business. (Wall Street Journal)

Messaging app startup Kik reaches $1 billion valuation. The Canadian company has raised $50 million from Tencent, the Chinese web portal company that owns another popular messaging service, WeChat. Kik’s new round of funding lands the service on Fortune’s unicorn list. (Fortune)

“Female Viagara” wins FDA approval. The drug Addyi (flibanserin) treats a lack of sexual desire in premenopausal women. Critics of Sprout Pharmaceutical’s libido-booster point to its decidedly unsexy side effects, such as sleepiness and nausea. (FDA Newsroom, Time)

 

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Your usual curator Heather Clancy is away on vacation. Fortune reporter Robert Hackett here, subbing in. You can reach me on Twitter (@rhhackett) or email robert.hackett@fortune.com. Feedback welcome.


THE DOWNLOAD

Fortune writer Laura Lorenzetti raises the curtain on Lannett, the fastest growing company in the U.S.

“The top company on this year’s Fastest Growing Companies list rocketed up the charts from No. 29 last year — and you may not even know its name. It isn’t a sexy Silicon Valley startup or a sharing economy starlet. Quite the opposite: it’s a 73-year-old drugmaker based in Philadelphia.” Read more on Fortune.com.


BITS AND BYTES

Google Wi-Fi router. The gizmo, called OnHub, could eventually take on Amazon Echo. (Verge)

United States of Emoji. An interactive map of national emoji-use from the predictive keyboard maker SwiftKey. Vermont, for instance, loves “💩”. (TechCrunch)

Mosquitos be gone! An ancient remedy may do the trick eradicating these bloodsuckers(Fortune)

Meet the ur-Terminator. Google’s Atlas rescue robot took a terrifying test stroll in the woods. (Information Week)

Hack your Apple Watch. If you’re sick of the preset Mickey Mouse face, that is. (ZDNet)

5-minute charger. This startup seeks to rapidly restore batteries. (Fortune)

Wakey, wakey, computer. These magic words will get any Window’s 10 computer featuring a sixth-generation Intel Core processor to rise and shine. (Gizmodo)

Move over, Siri. Nuance’s new dictation app will launch this fall. (Fortune)

Cyberspies and punk rock. Russian hackers have been snooping on the politically outspoken band Pussy Riot, among others. (Computerworld)

 



ONE MORE THING

Cyberspace is no longer an escape from the “real world.” Forces govern it through secret, inscrutable algorithms. (Aeon)


FINAL THOUGHT...

“Entire industries, whether it be automotive, financial services or retail, are being disrupted by software. What started as a trend in early-adopting Silicon Valley startups has taken hold in enterprises globally. There is a new way of doing things and that is what our customers want us to help them discover.”

Pivotal co-founder and newly appointed CEO Rob Mee, writing on a corporate blog about what he sees as the cloud software company’s role in the business universe. His rise to the post of chief exec at the EMC-VMware spinoff was announced yesterday. (Pivotal blog, Fortune)

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