What’s All This Talk About VMware Buying Red Hat?

We were looking at the swirling rumors coming in about a potential acquisition of Red Hat by VMware, and ultimately decided not to cover the rumor because … well because it seems so irrational.

But is that actually so?

This is what BusinessWeek wrote:

Speculation is rife that the company (Red Hat) is a takeover target. “It makes no sense that they’re still hanging out there,” says Eric Gebaide, a managing director at investment bank Innovation Advisors.

One possible suitor is virtualization software company VMware, which some industry executives says is on the lookout for an operating system to add to its portfolio. Former VMware CEO Diane Greene, ousted by her board in July, had set up meetings with Red Hat in part to position VMware as friendly to open source and possibly as a prelude to a buyout discussion, according to a person familiar with the conversations. Representatives of both companies declined to comment.

Ostatic followed up with a snapshot analysis, and now the folks over at Cnet News.com are trying to make sense of such an acquisition.

Ostatic concludes in its post:

A combination of VMware virtualization and a proven, popular operating system could pave the way for a future of healthy competition for VMware with other operating systems that bundle virtualization. I wouldn’t be surprised to see both VMware and Red Hat pursue all of this.

Meanwhile Cnet’s Matt Asay contradicts:

I would think this trend cuts the other way. Red Hat (and Novell) likely see virtualization’s commoditization as a reason to push the knife deeper into VMware. Being acquired by an important but commoditized feature of their operating systems doesn’t sound appealing to me…

What do you think?

About the author

I'm a blogger, entrepreneur, conference organizer, social media consultant, startup advisor and allround web addict, based in Belgium, Europe. I'm a writer at TechCrunch and managing editor of Virtualization.com.


  1. I initial covered the news on my site, though to be honest it didn’t make a lot of sense to me either. I wanted to see what others in the community actually thought about it. Since VMware is getting rid of the console OS, and as we all know, time and time again has stated that the OS is dead… why acquire an OS??? Does the company really believe the OS is dead or not? They’ve said as much, or is it just a larger stab at Microsoft?

  2. Tarry Singh says:

    I am as confused as David. It makes a lot less sense than the Cisco going after bloaty EMC and floaty VMware.

    Larry Ellison downplayed once Redhat’s acquisition sometime back calling it irrelevant. That was merely to fend off its growth and promote its own EL stuff. Redhat only came back with stronger revenues.

    Redhat and Bob Young’s legacy and vision has led it to not just withstand the last recession but also come out as a succefuly company. The new CEO, an outsider to software business is constantly under pressure (since Szulik’s departure after his wife got sick).

    I think going after Redhat will only make VMware’s case much weaker, not stronger. MS’s tie up with Novell/SuSe will only create the “other better and cheaper world” which Microsoft will portray as the true interop answer to VMware.

    Paul Maritz has a much bigger problem at hand than Redhat. VMware’s market share and market relevance will erode dramatically as Cloud Computing comes like a mad bull intensifying the commoditization of hypervisor and the whole virtualization industry as a whole.


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