VMware to buy start-up CloudHealth for $500 million

VMware is set to acquire CloudHealth Technologies for nearly $500 million as part of the information technology company’s push into cloud-based software services, Reuters reported.
VMware at Mobile World Congress
The Palo Alto, California-based VMware will purchase Boston-based start-up CloudHealth for the company’s cloud management platform. VMware did not reveal the financial terms of the deal.

VMware CEO Pat Gelsinger said the platform makes it possible for enterprises to control and analyze the costs, compliance and performance of their computing environments across their own data centers and public clouds like Amazon Web Services and Microsoft Corp’s Azure.

The company announced its acquisition in Las Vegas at VMworld, the company’s annual industry conference, where it also announced a series of new cloud services, including an expansion of the VMware Cloud on AWS partnership with Amazon.com.

VMware has been adding subscription-based software services over the past year as more corporations begin to shift their computing and data storage systems off of their own servers and into public clouds.

Key to this strategy has been the VMware Cloud on AWS partnership that makes it simple for enterprises to transition onto the cloud. With the addition of CloudHealth, VMware is making it easier for its customers to manage services on other cloud providers, such as Azure and Alphabet Inc’s Google Cloud Platform.

Among infrastructure decision makers at enterprises, 91 percent said they use two or more vendor’s public cloud environments, with 19 percent of respondents saying they use between six and nine, according to an April report by Forrester Research.

Within the global cloud systems management software, VMware holds 21 percent of the market, followed by Microsoft Corp with 14 percent, according to 2016 figures provided by research firm IDC. That market is projected to be worth $5.4 billion this year and $10.1 billion in 2021, according to IDC.

VMware’s plans for CloudHealth include the integration of two of VMware’s existing cloud services, analytics tool Wavefront and security tool CloudCoreo. More services will become integrated over time, and CloudHealth, which has hundreds of employees, will continue to operate in Boston.

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