On Thursday, Red Hat announced the acquisition of Israel-based Qumranet in a move that quickly expands Red Hat's virtualization technology offerings. Qumranet was co-founded by Moshe Bar, who also co-founded the open-source Xen project. Remember, XenSource was later acquired by Citrix for a whopping $500M, and the project is the foundation for many commercial virtualization platforms such as those from Citrix, Oracle, and Virtual Iron.
As far as the Qumranet purchase price goes, it is difficult to tell what the multiplier effect is here -- but a purchase price of $107 million in an all-cash transaction sure does seem like a good deal for the folks who started and invested in Qumranet.
According to Red Hat, it doesn't sound like its new acquisition is going to bear fruit from a revenue standpoint in the remainder of Red Hat's 2008 fiscal year. The odd thing here is that Red Hat's fiscal year ends in February of 2009 -- meaning the acquisition won't materially contribute revenue for the company over the next 6 months. The company did, however, add that it expects the acquisition to add up to $20 million in revenue the following year.
So what then does the acquisition bring Red Hat? According to the company, it gains Qumranet's virtualization solutions, including its KVM (Kernel Virtual Machine) platform and SolidICE offering.
Qumranet is the inventor and key maintainer of KVM, the only virtualization technology that is fully incorporated into the Linux kernel. Red Hat views KVM as the next generation of virtualization technology -- it combines support for the latest hardware virtualization capabilities and the rapid feature development of the Linux kernel into a complete, highly functional virtualization platform.
Qumranet also developed SolidICE, a high-performance, scalable, desktop virtualization solution built specifically for virtual desktops. SolidICE is designed to enable a user's Windows or Linux desktop to run in a virtual machine that is hosted on a central server. It is based on the industry-leading Simple Protocol for Independent Computing Environments (SPICE), which overcomes key barriers to VDI adoption, including a superior user experience enabled by the SPICE protocol capabilities. This protocol could be a key differentiator for Red Hat, as it outperforms competitive solutions such as Microsoft RDP and Citrix ICA. For a VDI or remote desktop solution to truly pass the test, end-users have to buy in on the experience. And the SPICE protocol may be just what the VDI doctor ordered.
Just as important as the technology acquired, Red Hat also gains Qumranet's talented team of professionals that helped develop, test, and support Qumranet solutions. It also gets the company's community leaders in the open-source KVM project.
"Red Hat customers enjoy highly responsive, flexible, and cost-effective IT infrastructures," said Jim Whitehurst, president and CEO at Red Hat. "This acquisition furthers our capability to widen the gap between open source and proprietary infrastructure software. Put simply, Qumranet's KVM and VDI technologies are at the forefront of the next generation of virtualization. They represent an opportunity to raise the bar and meet the market's demand for virtualization solutions."
And if you were wondering, they also said the acquisition doesn't mean the end of the Xen hypervisor at Red Hat -- at least not yet. The company said it would continue to support Xen until at least 2014 (seven years after the release of Red Hat Enterprise Linux 5). Red Hat continues to be an active member of the Xen development community and is currently working on further integration work between the Xen hypervisor and the Linux kernel.
Much like it did with its acquisition of JBOSS, Red Hat's latest acquisition of Qumranet is expected to shake things up in the industry. Lines are being drawn in the sand between KVM, Xen, Hyper-V, Parallels, VMware, and others. But Red Hat's future now seems to be shaped by KVM. So how does it all play out in the end?