Would A VMware Acquisition Of Novell Make Sense?

There are rumors afoot that VMware is among the companies bidding to acquire Novell. Why would the virtualization technology giant be interested in Novell, best known as the purveyor of SUSE Linux?

Two answers: “Red Hat” and “cloud management.”

First, a recap. Back in March Novell rejected an unsolicited $2 billion buyout offer from investment firm Elliott Associates. But the company’s board at the time announced an effort to “maximize shareholder value” and it’s been an open secret Novell is up for sale to the highest bidder.

So why VMware? With virtualization widely seen as a first step to cloud computing, VMware has been positioning itself as a supplier of automation and management technologies for building cloud computing infrastructures. In doing so, it’s joining a rapidly growing list of software vendors including startups like AppDynamics and established companies like CA and Novell in offering cloud management tools.

At its BrainShare conference in March Novell unveiled additions to its ZENworks configuration management software, part of the vendor’s strategy of expanding its virtualization and cloud management tools.

So that would make Novell a VMware competitor, right? Maybe. But last week Red Hat, Novell’s competitor in the Linux platform space, unveiled plans to expand its own line of cloud management software.

More importantly, Red Hat is making a lot of noise about taking on VMware in the virtualization arena, competing directly with VMware’s cash-cow virtualization products by building hypervisor technology based on the Kernal-based Virtual Machine (KVM) into its Red Hat Enterprise Linux. At the Red Hat Summit customer conference in Boston last week, the company’s push into virtualization was the top message from Red Hat executives.

Last month VMware unveiled a deal to distribute and support Novell’s SUSE Linux Enterprise Server operating system with its vSphere technology and standardize its virtual appliance-based products on that operating system.

So in a "the-enemy-of-my-enemy-is-my-friend" world, does that make Red Hat the enemy and Novell a strategic friend and an acquisition target?

The question is whether VMware would really shell out a couple of billion dollars for Novell. In the world of cloud computing the operating system is no longer king. Despite the aforementioned Novell partnership, VMware has said it doesn’t want to be known as an operating system vendor -- a position it considers a competitive differentiator with Microsoft and Red Hat.

VMware has been acquiring other companies, but the focus there is on building up its developer tools and frameworks for building apps that run on the VMware virtualization environment. Acquiring Novell would bring along a clutter of identity management and groupware products that are far outside VMware’s turf. Given Novell’s broad, even disparate product offerings, however, the thinking is that any acquirer -- VMware or otherwise -- will likely sell off pieces of the company anyway.

So what are we left with? Novell is staying mum on what companies have expressed interest in acquiring it and it appears likely the bidding process has a ways to go. VMware seems like a stretch for a suitor, but there have been many stranger pairings as we illustrated in our recent slide show, 10 Bizarre Tech Acquisitions of the Last Decade. At this point, I wouldn’t rule anything out.

Tweet

   

More Applications & OS