VMware Acquired Pivotal- Cloud based Application Management Space is Getting Hot

 VMware Acquired Pivotal for VMware's Push for Vertical Integration in the Cloud Space

Immediate Push

 Pivotal was available at a throwaway price for the capabilities that it brought in. Pivotal after a great start and lots of funding from companies like EMC, GE and VMware themselves, went for an IPO in 2018. After a disastrous June earnings report that year, Pivotal’s stock dropped 42% in one day. Pivotal market cap fell from US$5.8 billion on May 30 to US$2.2 billion on Aug 14. By offering $15.00 a share, VMware rescued the struggling company. The fight was also to get the Kubernetes led container management business that helps in connecting the infrastructure layer and the containerized applications running upon it. If we look at the acquisition of Red Hat by IBM, which brings in similar albeit a much broader synergistic capabilities to IBM, the price that VMware paid for Pivotal is a throwaway for VMware. IBM paid US$32 billion for Red Hat. VMware paid US$2.7 billion for Pivotal.

 

Pricing was the immediate push considering the already hot market space that Pivotal was operating in.

 

The Background is More about Synergies 

 

Pivotal was founded in 2013, and its Cloud Native platform handles software innovation for Fortune 2000 companies. It helps in building and managing software with a focus on developer productivity through platform abstractions and development techniques as well as connecting the business with the developers. With its suite of products, Pivotal can support enterprises become like modern software companies by adopting DevOps and Lean techniques

 

Combining VMware’s Kubernetes run-time infrastructure and management and Pivotal’s developer-centric offerings would result in the formation of one of the most comprehensive application platform in the industry. VMware would go from the one of the best infrastructure software company to one of the best infrastructure and developer software company. It can now serve customers from hypervisor to developer tooling as the customers embark on the journey to cloud and undertake modernization initiatives.

 

There are other very intricate synergies like the 600,000 customer base for VMware who are already familiar with VMware technology that could be easily moved to the combined VMware and Pivotal platform.