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What VMware’s SpringSource Acquisition Means for Microsoft

Table of Contents

  1. Summary
  2. Relevance of the acquisition
    1. The four approaches to managing TCO
  3. Strategic rationale for VMware
    1. Regrouping to address Microsoft’s existing advantages
    2. Fighting back on pricing
  4. Unexpected competition for Microsoft
  5. About TechAlpha

1. Summary

On Aug. 10, VMware announced a definitive agreement to acquire privately held open source Java application framework and platform developer SpringSource for $420 million ($331 million in cash, $31 million in equity for vested options, $58 million for unvested stocks/options).  SpringSource, founded in 2004, had raised $25 million in two rounds of VC funding led by Accel and Benchmark Capital. The transaction is expected to close in September 2009.  VMware expects SpringSource to be cash flow positive by the first half of 2010, implying that billings will likely exceed $30 million on an annualized basis.