VMware enters the PaaS fray with SpringSource purchase

At the crossroad of virtualization and cloud computing, VMware apparently chose to build up their PaaS capability by buying SpringSource for over $362 million in cash. I don’t think this purchase alone will make VMware a major player in the PaaS space but it is nevertheless telling of their strategy.

VMware already is a dominant vendor in the virtualization space, owning 55% to 80% of the virtualization marketshare according to sources on the web. However, they have a formidable competitor in the form of Microsoft and emerging competitors in the form of cloud providers who are targeting the Enterprise IT Infrastructure market.

As a result, I expect VMware to look at the following areas as growth as well as competitive threats:

1. Data Center Server Virtualization – Microsoft Hyper-V and Citrix XenServer are the major competitors to VMware’s expanding offerings.
2. Private Cloud – VMware has been positioning its infrastructure software for those IT Infrastructure folks who want to establish Private Cloud. This is provided as an alternative as the public cloud providers such as Amazon Web Services’ EC2.
3. IaaS – Infrastructure as a Service is basically what AWS EC2 provides.  You can use this contingent infrastructure to spin up servers when necessary without having idle capacity that is not used most of the time.  VMware’s interest would be to either become the platform of choices for major IaaS vendors (not likely with Amazon doing everything in-house) or make it unattractive for IT Infrastructure folks.
4. SaaS – There is no direct competition between VMware with software vendors that provide their products in SaaS form.  However, if enterprise IT moves to adopt SaaS in a major way, they will not need to run as many servers in-house.  As a result, there will be less need for virtualization software.  It can be a threat.
5. PaaS – Microsoft has been pushing the Windows Azure Platform for a couple of years now.  They want ISVs to develop on their platform and then stay wedded through the deployment and service their end customers using Microsoft PaaS.  This can have a similar effect as SaaS in that it would shrink the footprint of in-house IT and reduce the market potential for virtualization.  Remember too, Google and Amazon are also vying for this space with their developer API offerings for developers.

VMware has been quite active in the Private Cloud area looking at their press activities, but this latest acquisition indicates that they are gunning for PaaS too.  I really wonder how well VMware can execute with this strategy, given that PaaS needs a significant invest in the operations capability.  It is not just building software and shipping it to IT customers.  They will also need to start pulling together a developer community who is traditionally more aligned with Amazon and Microsoft.

Also, there might be too much noise in this space already.  Amazon has significant mindshare and marketshare.  Microsoft has the advantage that they own the Microsoft platform.  I am not sure I see VMware being very successful with this buy but further analysis from others may reveal angles that I have ignored.    What do you folks think?