(UPDATE 10/22: EMC has made it official. VCE will become an "EMC company" later this quarter. Cisco will continue holding a 10 percent stake.)

EMC is bringing VCE closer to the fold by buying out part of Cisco's stake in the joint venture, according to a report Tuesday night on Bloomberg.

The companies appear to be preparing a formal announcement for Wednesday morning, which would be right around the time that EMC announces its third-quarter earnings.

Cisco, which recently denied that it's cutting off investment to VCE, would reportedly continue to own some piece of the joint venture. But it looks like VCE would be considered an EMC business, with revenues folded into EMC's quarterly results.

The deal should surprise no one, considering that EMC and Cisco are increasingly becoming competitors. That's particularly clear in the arena of software-defined networking (SDN), where Cisco's Application-Centric Infrastructure (ACI) and VMware's NSX seem pitted against one another, taking different philosophies toward network virtualization and automation. (EMC owns 80 percent of VMware, and VMware is a partner in the VCE joint venture.)

And as data center hardware continues to converge, it seems inevitable that the two companies will overlap more and more, making their shared investment in VCE increasingly awkward.

Cisco might still have some interest in VCE, though, because it's a good source of shipments servers, including some of the largest shipments of Cisco's Unified Computing System (UCS), according to analyst Stuart Miniman of Wikibon.