More Acquisitions Ahead for VMware?

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Virtualization software maker VMware delivered
stellar fourth-quarter sales and earnings this week, but analysts are
already laying odds on which software companies it will acquire this year as
it builds out its platform-as-a-service (PaaS) strategy.

Technology investment research firm 451 Group this week offered up a list
of potential takeover candidates, including the likes of
Chordiant Software (NASDAQ: CHRD), a Cupertino, Calif.-based developer of
customer relationship management (CRM) applications; Terracotta, a San
Francisco-based open source developer of applications that support
virtualization and cloud computing; and Skyway Software, a Tampa, Fla.-based
developer of an open source, Java-based development environment on the
SpringSource platform.

Palo Alto, Calif.-based VMware (NYSE: VMW) recently has shown it’s not
averse to inorganic growth.

In August, VMware acquired SpringSource, a Java Web
development and middleware vendor that’s central to the open source Spring
Framework used and supported by numerous Java middleware vendors, including
Red Hat JBoss and IBM Websphere.

Earlier this month, VMware snapped up Zimbra, Yahoo’s
open source e-mail collaboration unit.

“VMware is expected to be a player in the burgeoning PaaS space,
particularly in building applications for private cloud environments,” 451
Group analyst Dennis Callaghan said in a research note. “VMware’s recent
deal for Zimbra can fit into this strategy, but we anticipate that it will
notch a few more buys — some small, some potential blockbusters — as the
year progresses.”

VMware’s inclination to buy and expand its sphere influence beyond
datacenter virtualization to more cloud-based offerings is buoyed by
mounting evidence that IT capital spending budgets will expand in 2010.

“We’re seeing a major shift in our industry,” CEO Paul Maritz said during
a conference call with analysts this week. “The great recession of 2009
convinced customers they can’t prop up aging infrastructure forever.”

451 Group also named GemStone Systems, a Beaverton, Ore.-based data
management software developer, MuleSoft, an open source infrastructure
software developer in San Francisco, and Sopera GMBH, another open source
infrastructure software developer based in Germany, as potential M&A
targets.

Callaghan said VMware still needs to find a dynamic open source database
to support its PaaS suite.

“It’s a long shot, but.the best database to underpin the
VMware-SpringSource PaaS offering would be the open source MySQL,” he
wrote. “We have to think VMware would love to take MySQL off of Oracle’s
hands.”

“Whether Oracle would let it go and help a PaaS and application server
rival is another matter,” he added.

Should VMware opt to go on a shopping spree, it will have plenty of
cannon fodder to expend. The company exited the quarter with $2.4 billion in
cash.

Larry Barrett is a senior editor at InternetNews.com, the news service of
Internet.com, the network for
technology professionals.