VMware buys DynamicOps to manage Xen, AWS

VMware CEO Paul Maritz

Updated: VMware (s vmw) has acquired DynamicOps, a Burlington, Mass.-based cloud computing startup that spun out of banking giant Credit Suisse’s IT department in 2008. DynamicOps began as a virtualization-management vendor, but ventured into the private-cloud space in 2010 and later entered an OEM deal with Dell to serve as the self-service component of Dell’s Virtual Integrated System software suite.

VMware clearly expects DynamicOps to let the virtualization leader keep its upper hand as commodization of and diversification in the hypervisor space forces VMware to shift its pricing model away from licensing virtual machines. From the press release announcing the acquisition:

VMware believes that customers will benefit most by a standardized architecture, but will build solutions that make it easy for customers to choose the model that best works for their needs, including heterogeneous environments/management. … DynamicOps builds on the capabilities of vCloud Director by enabling customers to consume multi-cloud resources (e.g., physical environments, Hyper-V- and Xen-based hypervisors, and Amazon EC2).

The acquisition (rumors of which have been floating around for months) makes a lot of sense given VMware’s push up the stack from being a provider of server virtualization to being the management layer for the software-defined data center. The company needs to care a lot less about what’s running at the infrastructure level and a lot more about enabling a new class of applications to run dynamically atop those resources. DynamicOps furthers this vision by opening VMware’s doors to customers running competitive virtualization software and using Amazon’s (s amzn) cloud that competes with VMware’s vCloud strategy.

Update: Deals of the term were undisclosed, although sources tell me the sale price was between $100 million and $150 million, and probably closer to the top half of that range. DynamicOps had raised $16.3 million in venture capital, including $5.3 million from Intel Capital in September 2011 and $11 million from Sierra Ventures, Next World Capital and investment bank Credit Suisse in February 2011.