VMware (NYSE: VMW) confirmed recurring rumors that it will spin off a new cloud venture tying EMC’s (NYSE: EMC) Greenplum and Pivotal Labs units with the virtualization vendor’s SpringSource, GemFire, Cloud Foundry and Cetas businesses into a new "virtual organization" called the Pivotal Initiative, headed by Paul Maritz, EMC chief strategy officer. In total, some 600 VMware employees and 800 EMC employees are involved.

Terry Anderson, VMware global corporate communications vice president, described the plan in a blog post as VMware and EMC “committing key existing technology, people and programs from both companies focused on Big Data and Cloud Application Platforms under one virtual organization—the Pivotal Initiative.”

Anderson said that the decision to craft the Pivotal Initiative was prompted by “a major change in the wide scale move to cloud computing, which includes both infrastructural transformation and transformation of how applications will be built and used based on cloud, mobility and big data.”

Where do VMware and EMC see the opportunity play? Not only at the infrastructure level but also in the application development and big data spaces. As such, the Pivotal Initiative may house, literally and figuratively, VMware’s and EMC’s developmental efforts in these areas. The companies plan to "formally unite" people and programs from both organizations focused on big data and cloud application platforms by Q2 2013. An organizational structure, Anderson said, is still in the works and the vendors pledged to update their plans publicly sometime in the first quarter of next year.

What all this boils down to is the reshuffling of VMware’s deck enables it to come up with a suitable cloud services competitor to Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) and frees the vendor to focus on its profitable vSphere cloud infrastructure platform, cloud management and virtualization enterprise businesses. Pivotal Initiative solutions will be optimized for the vCloud Suite, according to Anderson.

"By realigning resources within the Pivotal Initiative, VMware can more fully focus resources on delivering the software defined datacenter, the de facto infrastructure at the heart of cloud computing, and on end-user computing – two areas where we see tremendous opportunity for growth,” she said.

As for EMC, the spinoff enables it to leverage Greenplum and Pivotal Labs into something bigger and perhaps capitalize greater returns on its investments in big data and analytics, cloud application services and the software-defined data center.

VMware launched Cloud Foundry in 2011, which, as an open platform-as-a-service (PaaS), is intended for developers to use to build, test, deploy and scale applications across a variety of private and public clouds. VMware’s SpringSource unit, which it purchased in August 2009, bought GemStone, a data management specialist, in May 2010. EMC purchased the San Francisco-based Pivotal, an agile software development specialist, in March.

Anderson cautioned that the spinoff will not affect existing customer or partner agreements and support contracts. “Customers and partners can continue to buy products and services as they normally would from both companies without interruption during this alignment,” she said.

It’s difficult to say for sure but VMware may have come clean when the spinoff rumor resurfaced here last week after some initial salvos appeared in July. Sometimes, but not always, insistent rumors such as this one that involve hundreds of personnel hit a little too close to home, compelling the principles to talk about it. Maybe that happened here.