EMC and Cisco are characterizing the recapitalization of the VCE joint venture as a way to untether the joint venture from the bureaucracy of answering to two parent companies.

As Bloomberg surmised in a report last night, the companies announced this morning that EMC is buying most of Cisco's stake in VCE. The joint venture will be majority-owned by EMC and will become an EMC Federation company alongside Pivotal, RSA, and VMware. VCE's earnings will be folded completely into EMC's.

Cisco will end up with about a 10 percent stake in VCE. VMware, the third partner in the joint venture, would hold less than 10 percent; executives on a press call Wednesday morning didn't give specifics beyond that.

The deal is expected to close later this quarter.

The assumption was (and still is, let's face it) that the increasing rancor among the partners — Cisco looks like it's going to be pitted against VMware and EMC in more and more markets over time — gives Cisco reason to distance itself from EMC and VCE.

The parent companies insist, though, that the motivation is to make VCE more "agile and creative," as Howard Elias, EMC's president and COO of global enterprise services, said multiple times on the call. The implication is that the original partnership structure was holding back VCE's agility and creativity — and there might actually be some truth to that.

"JVs by their very nature have a different governance with multiple companies and a board looking at everything from strategy to investment decisions," Elias said. Having to confirm all decisions with both Cisco and EMC (VMware, though a partner, is majority-owned by EMC) does seem like it would slow down the company.

It does not mean, though, that VCE is interested in using technologies outside its parent companies'. So, don't expect an influx of white box switches getting glommed onto Vblocks. Rather, the emphasis will be higher in the stack.

"We now are able to pull from techs from Pivotal, and from VMware's orchestration and management stacks," said Praveen Akkiraju, VCE's CEO, on the call.

In the third quarter of 2014, VCE reached a run rate of $2 billion per year, the parent companies say, and business has been growing at 50 percent per quarter for the last six quarters. So, even if Cisco finds itself annoyed with its partners, there's motivation to stick with VCE, because it's a source of sales for Unified Computing System UCS servers and for Nexus switches, as VCE has picked Cisco's Application-Centric Infrastructure (ACI) as its favored model of software-defined networking (SDN).

"None of the companies we work for want to screw this up in any way," said Gary Moore, Cisco COO, on the conference call.

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