It's not the glory days of Sun (JAVA) paying $1 billion for MySQL or Yahoo (YHOO) paying a zillion for Zimbra, but the spigots seemed to have opened again for enterprise software acquisitions. Maybe the recession is winding down, as the political pundits say. Or maybe there is so much government stimulus money sloshing around the economy that bankers don't know what to do with it again.
On August 10, VMware (VMW) - almost wholly owned by EMC (EMC) - acquired a small enterprise-software-development software supplier called Springsource for about $400 million. It's an interesting story on many levels with implications for IT staffers and managers everywhere. As is my constant mantra, don't let your CEOs and owners depend on the mainstream media for the version of the story they hear.
On one level, of course EMC/VMware's acquisition move means enterprise-software industry/brand consolidation continues. There was never much doubt of that - given the Oracle (ORCL) bankroll and strategy - but you need to always keep that fact in mind. When you invest in software - whether for your company's or organization's business processing, program development or infrastructure - remember that the company that supports it might not be around tomorrow, unless it's one of a dozen leading software suppliers such as EMC. That's an issue the bigger and more strategic the software you're considering is.
Then on another level there is the mention of EMC in an enterprise-software blog post. Yes, they are a leading software supplier despite their history and reputation for storage subsystems. That is true both under the VMware brand and with EMC-badged software. The Springsource acquisition moves EMC into the category of program development software, which is a step up - depending on your view of a software stack - from EMC's previous total concentration on infrastructure software. With Oracle moving down the stack via the proposed acquisition of Sun, it looks like there is a trend here (although Oracle may totally be interested in Java and may eventually spin back out the Sun systems and storage subsystems businesses).
And at another level, there is the deal itself and the many interpretations I've seen in just 12 hours.
- BusinessWeek says it is being done so VMware can make itself "stickier," that is "less replaceable in corporate data centers." That would be true only if the Springsource products were going to become some kind of exclusive built-in front end to VMware's virtualization capabilities. That would be a shame. Spring illustrates what Sun could have done with Java Enterprise Edition.
- Computerworld says "The two companies plan to build solutions for more efficiently running, building, and managing applications within internal and external cloud architectures." That's a buzzword analysis either by ComputerWorld or by a VMware or Springsource executive. Hopefully any new Springsource products post acquisition will run as well on premise as in the cloud. Some commentary implied that that would be the case.
- The VMware press release included, and a few media outlets picked up on, this sentence: "SpringSource is at the forefront of 'lean software,' a concept that is being rapidly adopted by enterprises focused on dramatically cutting cost and complexity, increasing productivity and accelerating the delivery of high-quality, business-critical applications." It sounds like the revenge of the rapid application development (RAD) nerds, circa 1993.
Not mentioned anywhere that I could see in the first-24-hour instant coverage (but I admit there was too much commentary to read it all) is that Springsource itself is the amalgamation of four incompatible enterprise software brands, most recently acquiring Hyperic in May 2009. In fact, it is possible that despite all the talk about lean, sticky clouds that Hyperic was the jewel of the acquisition. That's the Springsource brand that most closely aligns with classic VMware functionality.
So again, don't bet on the supplier of your enterprise software being around for long unless it is one of the dozen market leaders that account for 80 percent of the business (rough approximation; I haven't done the calculation in a while). There is no problem with using enterprise software from one of the other 10,000 software suppliers in the market as long as the need is tactical and you have the necessary support resource easily available separate from the supplier.