VMware will take over CloudHealth Technologies as part of the information technology company's continued push to cloud-based software services, the company said Monday.
The company in Palo Alto, California, will pay approximately $ 500 million for the Boston-based start-up, sources told Reuters.
VMware will acquire CloudHealth for the company's cloud management platform, VMware CEO Pat Gelsinger told Reuters. This platform enables organizations to control and analyze the cost, compliance and performance of their computing environments in their own data centers and public clouds, such as Amazon Web Services and Azure from Microsoft Corp.
"Using apps in a cloud uses multiple public clouds, how can I manage that complexity, and CloudHealth is focused on that," said Gelsinger. He declined to comment on the price of the deal.
The company announced its acquisition in Las Vegas at the annual VMworld industry conference, where it also announced a number of new cloud services, including an extension of the VMware Cloud to AWS partnership with Amazon.com Inc.
VMware added subscription-based software services over the past year as more and more companies move their computer and data storage systems from their own servers to public clouds.
The key to this strategy was the VMware Cloud on AWS partnership, which makes it easier for businesses to transition to the cloud. With CloudHealth, VMware makes it easier for its customers to manage services on other cloud providers, such as the Google Cloud Platform from Azure and Alphabet Inc.
"We will refresh the vision we have for the cloud," said Gelsinger.
Within global cloud system management software, VMware holds 21 percent of the market, followed by Microsoft Corp. with 14 percent, according to figures from market research firm IDC from 2016. This market is said to be worth $ 5.4 billion this year and reach $ 10.1 billion by 2021, according to IDC.
"The multi-cloud is a growing use case, and corporate IT departments are very interested," said Paul Delory, an analyst at Gartner. "It's important for everyone in this room to work with multiple cloud providers."
VMware expects the acquisition to be completed this quarter. Its immediate plans for CloudHealth include the integration of two of VMware's existing cloud services, the Wavefront analytics tool and the CloudCoreo security tool. More services will be integrated over time, and CloudHealth, which has hundreds of employees, will continue to work in Boston, Gelsinger said.
Dell owns 81 percent of VMware and considered amalgamating the two companies earlier this year. Dell eventually proposed to pay $ 21.7 billion in cash and shares to repurchase tracking stocks that are in line with his economic interest in VMware, partly funded by a $ 9 billion special dividend from VMware become.
Some shareholders in the stock that tracks Dell's interest in VMware may oppose the deal because they find the offer too low and unfairly transfer the value to Dell, it said, and a vote is expected in October.