A Midas Touch

By Darryl K. Taft  |  Posted 2009-08-11 Print this article Print


Just a member, but a newly wealthy member. Do not think that seeing SpringSource acquired in a deal with an overall value of $420 million is not a little bit extra satisfying to Johnson and his SpringSource crew. There was more than a slight rivalry between SpringSource and JBoss in the enterprise Java, open source community. And seeing SpringSource go for an asking price of $362 million and $420 million overall -- well, let's just say for more than the $350 million JBoss commanded -- was quite a feat in a down economy. It also is clearly a source of pride for Johnson and his crew of Java "heretics" as he called them.

And word is not only did Johnson insist on maintaining an open source focus for SpringSource, he also "opened" the process of cashing in on the sale of the company. Word is he took care of his people so that a lot of folks will get paid and paid well off the deal.

In addition, the deal shows that Benchmark Capital partner Peter Fenton continues to have a Midas Touch (having two acquisitions on Aug. 10 with FriendFeed), in that he invested in SpringSource and had also invested in JBoss. Other Fenton investments include Hyperic, Wily, Xensource, and Zimbra, as well as EngineYard, FriendFeed, New Relic, Terracotta and Twitter.

In its 8-K filing with the U.S. Securities and Exchange Commission, VMware said:

"In connection with the merger, VMware has also agreed to establish a retention pool of approximately $60 million in VMware stock options and restricted stock units from the VMware 2007 Equity and Incentive Plan to be issued to employees of SpringSource following the closing of the merger."

On the VMware conference call, Mark Peek, VMware's chief financial officer, said this move was aimed at keeping the SpringSource development talent in the fold.

Neelan Choksi, former chief operating officer (COO) at SpringSource and current member of the SpringSource board, said, "I think the acquisition of SpringSource by VMware is awesome. It is a great result foremost for the community. The complementary nature of the two companies' respective technologies presents an incredibly compelling soup-to-nuts opportunity. Additionally, I am thrilled for the employees... I know first hand how much effort so many people put into making SpringSource successful and I am so glad that their passion has had a great tangible result but am also excited because their work will continue for the betterment of technologists around the world."

Salil Deshpande, a partner with the venture capital firm Bay Partners, which helped broker SpringSource's acquisition of G2One, said, "I'm pleased with the acquisition, not only for financial reasons, but also because it's a good home for the technology... This was important for VMware. I don't think VMware can remain simply a virtualization vendor. Virtualization is just table-stakes, at this point. Cloud computing will be too pervasive and too important for VMware to remain only a virtualization vendor. It needs to do more. It needs to make many moves such as the SpringSource one."

Analyst Tony Baer takes that thought a bit further:

"VMware isn't finished however. The most glaring omission is need for Java object distributed caching to provide yet another alternative to scalability. If you only rely on spinning out more VMs [virtual machines], you get a highly rigid one-dimensional cloud that will not provide the economies of scale and flexibility that clouds are supposed to provide. So we wouldn't be surprised if GigaSpaces or Terracotta might be next in VMware's acquisition plans."

Finally, there's a bit of irony in this whole VMware/SpringSource deal. Paul Maritz, VMware's COO Tod Nielsen, and Charles Fitzgerald, vice president of product management at Decho, another company in the VMware family under EMC upon which Maritz is a board member, all had key roles, as former Microsoft executives, in the software giant's landmark antitrust battle with the government. In that case, Microsoft was said to have maintained an applications barrier to entry against Java. And Maritz, Nielsen and Fitzgerald were tasked with defending Microsoft's position against Java and Sun Microsystems. Maritz served as a key witness in the case and Nielsen and Fitzgerald served as key Microsoft strategists who often sat in court observing the proceedings.

Now these fellows are on the other side supporting Java. Though, to be fair, Nielsen did a stint at BEA Systems where he also was a Java supporter. Maritz essentially led the early .NET thrust at Microsoft, Nielsen helped build the Microsoft developer community, and Fitzgerald worked as a fixer behind the scenes. Now, on the other side, these guys will be formidable, and fun to watch. 

Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.

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