VMware Acquires SpringSource

| Aug 15, 2009 | Data Center | Competitive Update

| Analyst: Steve Schuchart

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

August 10, 2009 -- VMware has announced a definitive agreement to acquire privately held SpringSource. VMware will acquire SpringSource for approximately $362 million in cash and equity plus the assumption of approximately $58 million of unvested stock and options. The acquisition has been approved by SpringSource’s stockholders and is expected to close in Q3 2009, subject to customary closing conditions.

Analytical Summary

• Current Perspective: Positive on VMware’s acquisition of SpringSource, because it broadens VMware’s reach in the data center and will be an immense asset in moving VMware’s virtualization software in a direction of app-orientation rather than server orientation. VMware will gain not only the benefits of SpringSource’s well-respected business, but also a wider revenue base.

• Vendor Importance: High to VMware, because this new company gives VMware significant new market opportunities as well as the chance to add significant value to its own server virtualization software. By diversifying, VMware makes itself a much bigger general player in the data center market.

• Market Impact: Moderate on the server virtualization and management market, because the SpringSource acquisition will not have a huge immediate impact on the market, but it will have a much larger long-term impact as VMware begins to integrate more with the application layer.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Data Center | More information

Recommended Competitor Actions

• Competitors such as Citrix will need to partner with a middleware vendor to gain greater application awareness in order to compete with VMware in the future.

• Oracle can and should replicate any application awareness that VMware will be creating by simply integrating its own Oracle VM products with its popular middleware platforms. Oracle is in the best position of any VM vendor to do this, already having everything it needs in-house.

• Microsoft should make sure that its server virtualization offerings can accommodate anyone’s middleware in terms of application awareness. As an OS vendor as well as a VM vendor, Microsoft should be Switzerland when it comes to middleware from third-party vendors.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Data Center | More information

Top