Novell bids $205 million for virtualization management firm

Novell Monday announced
it had signed a definitive agreement to acquire for US$205 million PlateSpin,
a maker of tools to help companies adopt, extend and manage server virtualization
in the data center.

The deal, expected to close by April 30, will equip Novell with the technology
to help customers better manage and optimize heterogeneous physical and virtual
servers in next-generation data centers, the company said in a press conference
call. PlateSpin, founded in 2003, generated more than $20 million in revenue
in 2007 with its technology that disconnects software from hardware and allows
servers to be streamed over a network from any source to any destination. Such
capabilities, Novell executives say, will enable Novell to help its customers
better manage workloads and optimize data-center resources in any environment.
"It is a cornerstone of Novell corporate strategy to help our customers
work in a mixed environment," said Ron Hovsepian, president and CEO of
Novell.

The PlateSpin deal is Novell's second in two weeks. Last week, Novell announced
the acquisition of open source collaboration vendor SiteScape. Novell officials
are undecided on whether they will make any of PlateSpin's technology open source.

The pending acquisition will allow PlateSpin to expand its reach into larger
companies and couple its technology with Novell's Zenworks management tools
to "become a powerhouse," says Stephen Pollack, founder and CEO of
PlateSpin, which is headquartered in Toronto.

This acquisition ideally would help Novell accomplish a goal toward which many
management and virtualization vendors are working: heterogeneous management
of multivendor virtualization platforms. VMware
last fall acquired Dunes
Technologies to bring more management capabilities in-house, and Microsoft
is expected to couple its virtualization wares with management capabilities.

"It's going to be a big year for virtualization, and there is an awful
lot of money floating around the big players in the management market,"
such as BMC Software, CA, EMC, HP and IBM, says Rich Ptak, principal and founder
of market research firm Ptak, Noel and Associates. "The demand for platform-agnostic,
heterogeneous virtual management is going to be there, and Microsoft is going
to put a lot of pressure on the virtualization market because it is beefing
up its management capabilities. Successful vendors have to make virtualization
accessible and make management a critical function that is easy to implement."

Following the close of the deal, some 200 PlateSpin employees are expected
to join the Systems and Resource Management business unit at Novell. PlateSpin
products, such as PlateSpin Forge, PowerConvert and PowerRecon, will continue
for now with existing branding, as will Novell's Zenworks line. Going forward,
however, Novell will consider product integration and branding changes.

The deal was approved by the boards of both companies and must undergo the
customary approvals. That is expected to happen during Novell's second 2008
fiscal quarter, which ends April 30. Novell declined to comment further on the
more specific financials of the deal because the company has an earnings call
scheduled for Thursday, Feb. 28.