Virtualization, Enterprise, Mergers and Acquisitions, Virtualization

VMware: Ready to Spend Billions on Tech Acquisitions?

Intel CEO Pat Gelsinger
Pat Gelsinger

Instead of heading for the exit, VMware CEO Pat Gelsinger might be heading for the bank. Indeed, the virtualization company sees current technology company valuations as a potential opportunity to make strategic acquisitions -- including deals valued at $1 billion or more.

Gelsinger made the comments in an interview with Bloomberg, suggesting that falling valuations for unicorns (so-called $1 billion startups) have shifted the IT industry from a seller's market to a buyer's market in recent months. HP Enterprise CEO Meg Whitman made similar comments in June.

Gelsinger's M&A perspectives emerge nearly 2 months after CRN speculated that he planned to resign after Dell completed its buyout of EMC (VMware's parent). Gelsinger categorically denied the story suggesting he planned to resign. The Dell-EMC business combination is expected to become official this year.

Assuming VMware is on the hunt for acquisitions, potential buyouts would likely be designed to bolster the company's push toward software-defined data centers, end user computing and hybrid cloud offerings. VMware recently acquired Arkin Net to speed its NSX network virtualization business. And Channel Chief Ross Brown says partner program enhancements later this year will entice partners to accelerate their investments in NSX, VSAN and other fast-growth technologies.

Meanwhile, Gelsinger is striving to ensure VMware's NSX technology is cross-cloud in nature -- essentially creating a "cloud of clouds" across Microsoft Azure, Amazon Web Services and more. My bet: Current and former cloud services brokerages (or the associated aggregation software/APIs) could be on Gelsinger's target M&A list.

PS and food for thought: Docker was valued at $1 billion last year. But would they really sell to VMware? Has their valuation gone up or down? And could VMware really pull off such a deal? Hmmm...

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.