Joe Tucci, former CEO of EMC
Photograph by David Paul Morris — Bloomberg via Getty Images
By Jonathan Vanian
October 8, 2015

A report Wednesday that tech giant EMC is exploring a merger with Dell sent shockwaves throughout the technology industry. It would be among the biggest tech deals ever based on EMC’s market cap of nearly $50 billion.

EMC is actually a constellation of six independently run businesses that operate as one giant company called the EMC Federation. The idea is for them to cooperate — like creating a unified sales staff — to make each member stronger.

But critics have described the structure as unwieldy and confusing to customers and investors. Hedge fund Elliott Management has pushed the company to break itself apart because it believes that the combination isn’t as valuable to shareholders as it would be if it were torn apart.

A possible merger with Dell could be the answer EMC is looking for to get those activist investors off its back. But many analysts question if the deal makes sense from a technology perspective.

The following is all of the companies operating under the EMC Federation.

1. EMC II – the storage business

EMC II, the biggest business unit of the EMC Federation, specializes in selling data center storage gear. In 2014, the unit had $16.5 billion in sales of the entire $24.4 billion by the entire Federation. Although it’s by far the largest of the companies, it’s growing slowly because of the rise of cloud computing, in which companies can buy on-demand computing resources from giants like Amazon (AMZN) and Microsoft (MSFT). Even EMC’s product and marketing chief, Jeremy Burton, conceded in an interview with Fortune in August that the storage business could one day be passed by another Federation company as the top revenue generator because of changing customer buying habits.

2. VMware

VMware specializes in a type of technology called virtualization, which lets one server function as many, thereby cutting down on the costs of having data center gear. The company is the second largest business unit in the Federation with nearly $6 billion in sales last year. A Silicon Valley darling when it was founded in 1998, EMC (EMC) acquired the company in 2004 for $625 million. VMware had a successful IPO in 2007 and, at the time, had a higher market valuation than auto giant Ford (F). Since then, however, VMware (VMW) has struggled to recapture the excitement it once had, and for years its stock price has remained flat at $85 dollars per share. Elliott Management has pushed EMC over the past year to spin off VMware into a separate company.

3. Pivotal

Pivotal is the EMC Federation’s fastest growing business unit, although it’s still a baby when it comes to revenue. Last year, the company’s sales rose 27% to $227 million from 2013. Pivotal formed in 2013 as a spin off of parts of both EMC and VMware. It helps companies build cloud and data analytic software, and counts BMW, Lockheed Martin, and General Electric as customers. Although Pivotal’s sales are small relative to some of the other business units, it’s data crunching technology and emphasis on cloud computing has many analysts saying it’s better positioned for growth. Burton told Fortune over the summer that Pivotal could one day lead the Federation in sales.

4. RSA Security

RSA Security was founded in 1982 and originally specialized in encryption, a type of technology used to scramble data and communications from unwanted parties. EMC bought RSA Security in June 2006 for roughly $2.1 billion to add cyber security technology to its stable of products. RSA now sells a host of cyber security tools, including network monitoring tools and fraud detection services used to prevent identity theft. In 2013, the company faced some controversy when it was reported that the National Security Agency gave it $10 million to weaken its encryption technology so the agency could more easily spy.

5. VCE

VCE is a privately held company owned by EMC, and in some ways, it is itself a federation of companies within the EMC Federation. In 2009, Cisco Systems (CSCO), EMC, and VMware partnered up to develop a data center product known as converged infrastructure. The all-in-one data center box combines servers, storage gear, networking technology, and software into one appliance. The companies formalized the business and named it VCE in 2011. Last fall, EMC took a bigger stake in VCE, which reduced Cisco’s ownership in the company.

6. Virtustream

Virtustream is the newest member of the EMC Federation, with EMC buying the cloud-computing company this summer for $1.2 billion. The company was originally founded in 2009 and its customers include Pizza Hut and Intel. Before EMC bought the company, Virtustream was reported to have an annual revenue run rate of $100 million. Technology giant SAP was a big investor of Virtustream and drove a $40 million funding round in the company back in 2013.

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