VMware's SpringSource purchase has yet to pay off

Two years and $420 million later, it's unclear whether the Spring framework hit the expected value, but it can still gain traction

When EMC VMware acquired SpringSource a little over two years ago, I worried that the hype surrounding the deal greatly overshadowed the real opportunities that SpringSource brought to VMware. I stand by that worry today. Although SpringSource technology now underpins VMware products like vFabric and Cloud Foundry, neither has helped move VMware's revenue needle in a noticeable fashion.

VMware CEO Paul Martiz confirmed this during VMware's Q2 2011 earnings call:

... as well as we continue to invest in the Spring Framework and the combination of the Spring Framework with Cloud Foundry. But I think it would be fair to say we're still plowing the ground there. And we expect those investments to pay off well over the longer term, but we're still in the development phases of the market.

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Considering the typical five-year payback periods used to evaluate acquisitions, all I can think is that VMware faces a busy three years in which to justify the nearly $420 million valuation it paid for SpringSource. That said, with SpringSource technology, VMware is in a significantly better position to grow beyond a hypervisor vendor and to become a platform vendor on a par with the likes of IBM, Microsoft, and Oracle.

The question is not SpringSource's potential but whether VMware can do something significant with it.

From a marketing pespective, VMware is certainly trying. This week, it announced deals with Canonical, Dell, and EnStratus to significantly expand distribution channels for Cloud Foundry technology. Of these, the Canonical deal is the most interesting, as Cloud Foundry could benefit from Ubuntu's leading share of Linux cloud and virtualization deployments. VMware certaily sees that potential, as stated on its website:

With more than 20 million active desktop users and a strong IaaS server OS popularity, it represents an important milestone for the open source distribution of Cloud Foundry, and is just the beginning of an ongoing collaboration with Canonical. Having the VMC client pre-installed and ready on millions of developer desktops makes a Cloud Foundry app deployment just a few commands away for anyone using Ubuntu.

But that's unrealized potential. The reality is less glowing. VMware's earning release highlighted the fact that 25,000 developers had signed up for Cloud Foundry. That certainly is a respectable number of interested users in three months since the beta announcement, but it's not uncommon for new products to gain interest when first introduced, only to trail off in the long run. There's some evidence already that most of the "25,000 developers" are just kicking tires: Fewer than 800 users have designated the various Cloud Foundry Git repositories on GitHub as "watched," a proxy for interest level among GitHub users. By contrast, the leading repositories count well over 5,000 watchers.

Of further concern, interest in the Cloud Foundry project targeted at Java applications is less than 20 percent of the interest of the overall Cloud Foundry project. Considering the revenue that Java attracts from enterprises, even in the face of languages such as Ruby and PHP, Cloud Foundry's growth into enterprise accounts could be less than smooth, given such low interest from the GitHub crowd.

Based on Google search trends for open source-based PaaS offerings -- VMware Cloud Foundry, Red Hat OpenShift, Amazon Beanstalk, and CloudBees' self-titled platform -- it's clear that the market is still wide open, with each candidate in the 15 to 25 percent adoption range.

If you add Google App Engine into the mix, interest in Google App Engine dwarfs the interest in Cloud Foundry and others by an order of magnitude.

I purposefully did not include the established platform vendors -- IBM, Microsoft, and Oracle -- in my level-of-interest comparison, as they would all dominate the rest. As much attention as Google App Engine has received and the likes of Cloud Foundry are getting today, they've yet to crack the enterprise market in a meaningful way.

It appears that Cloud Foundry is making good progress, but the road to enterprise acceptance, adoption, and revenue is well ahead of it.

I should state: "The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions.

This article, "VMware's buy of SpringSource has yet to pay off," was originally published at InfoWorld.com. Read more of Savio Rodrigues's Open Sources blog and follow the latest developments in open source at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

Copyright © 2011 IDG Communications, Inc.