VMware, Novell to Dance Server Virtualization Tango

VMware, Novell to Dance Server Virtualization Tango

September 16, 2010

More on server virtualization

At its VMworld trade show two weeks show, VMware CEO Paul Maritz disparaged the operating system, noting that it is being shunted aside as, "one of the implications is that more and more, traditional operating systems no longer see the hardware."

This is hardly a revelation. Maritz has been talking smack about the operating system for nearly as long as he's been CEO of VMware.

Why then, was the rumor mill in overdrive that VMware (NYSE: VMW) is about to swoop in like a vulture and pick SUSE Linux off of Novell's rotting carcass? (Rumors that were proven true as this article was being posted.)

Ok, that's a bit of an exaggeration, but the Wall Street Journal and a host of other publications reported Wednesday that according to the New York Post, "Novell has reached a deal in principle to sell itself in two parts, and will be signing a deal in three to four weeks." A private-equity firm is speculated to be buying the bulk of the company, while another buyer will purchase the business units of of Novell that develops and delivers SUSE Linux.

The WSJ said, "Several analysts said the most likely purchaser of SUSE Linux is virtualization and cloud infrastructure company VMware, noting that the company is already partnered with Novell in this area. They also said that purchasing the SUSE Linux could be a good strategic move for VMware."

That Novell (NASDAQ: NOVL) is being purchased is not surprising. Back in March, it rejected a bid from hedge fund outfit Elliott Associates, and ostensibly put itself on the market.

Now, it has indeed found buyers.

But why VMware? For starters, consider that VMware's two major competitors have operating systems as well as hypervisors: Microsoft has Hyper-V and Windows; Red Hat has KVM and Red Hat Enterprise Linux. VMware, while operating system agnostic, would certainly benefit from the integration having its own operating system could bring.

As Sean Michael Kerner notes on his Netstat -vat blog, "together with its own Linux engineering team (from SUSE), VMware could create even better integration for its technologies."

VMware and Novell are hardly strangers. The two expanded the scope of their June 2010 partnership when SLES received the VMware seal of approval with the release of SLES for VMware. Under the terms of the partnership, customers with a VMware vSphere license and subscription can receive a subscription for patches and updates to SLES for VMware as well as purchase technical support services from VMWare for SLES.

Whether or not the acquisition comes to pass, it's an interesting market barometer to consider, especially when juxtaposed with VMworlds of the past few years.

Consider this: Flash back to mid-September 2008. Two years ago, Lehman Brothers had just gone under, the markets were melting down. No one knew what the future held, but everyone was sure it wouldn't be bright. Except for VMware. VMworld 2008, held in Las Vegas two days later couldn't have been a more surreal contrast. Virtualization had just gone mainstream, and while VMware was a driving force, Hyper-V had a nascent share and Citrix had only recently purchased Xen.

At the time, we noted timing was VMware's most formidable competition, "Instead, the economy remained the elephant at the show. Whether it was casual hallway conversation or presentations, Wall Street loomed larger than Silicon Valley on everyone's mind."

In 2009, the show defied the economy and grew in terms of both attendees and exhibitors. It also clamped down on what it would allow the competition to do at its trade show.

Last month's show was the largest yet. With the economy limping toward recovery, acquisitions and consolidation are inevitable. VMware is no stranger to acquisitions followed by successful integrations, as it demonstrated throughout the year and at the show. Nor is it unfamiliar with Linux companies. The company, and the market in which it plays, has reached maturation.

Should SLES become a VMware asset, it will join Zimbra and SpringSource, expanding VMware's Linux presence as well as Linux's potential reach.

Amy Newman is the senior managing editor of ServerWatch and Enterprise IT Planet. She has been covering virtualization since 2001, and is the coauthor of Practical Virtualization Solutions, published by Pearson in October 2009.

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