Cisco Systems said Friday it will invest $150 million in VMware, joining Intel as a strategic investor.
After the investment Cisco will own 1.6 percent of VMware's outstanding shares. VMware will also consider appointing a Cisco executive to its board in the future.
Like Intel, Cisco is strengthening its ties to VMware, which is a key partner as virtualization spreads to the network. Intel earlier this month said it would buy a 2.5 percent stake in VMware. The investments come ahead of what's expected to be a big IPO.
As part of the agreement (see statement) with Cisco, VMware will enter a joint development agreement for data center optimization and other products.