VMware Can Disrupt Big Data Analytics With Cetas Acquisition

May 11th, 2012 by Trefis Team
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VMware (NYSE:VMW), the leading virtualization company has acquired Cetas, an early stage startup focused on making access to big data analytics easier and cheaper. Terms of the deal haven’t been disclosed yet. [1] VMware competes with Microsoft (NASDAQ:MSFT), Oracle(NASDAQ:ORCL) and Citrix (NASDAQ:CTXS) in the virtualization space.
See our full analysis on VMware

Pure Play Cloud Platform

Unlike most big data applications, Cetas’ software is designed to run on virtual resources like Amazon Web Services and VMware’s vSphere. With this software application, there is no need to sell physical servers along with the software, making this easier to scale and cheaper to use. This acquisition makes sense for VMware as its applications are deployed on the vSphere.

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This makes the business model an Analytics-as-a-Service model which opens it up to small and medium businesses. By deploying on the cloud, the application will not only be cheaper, it is potentially much faster and easily scalable as its primary resources are virtual.

Cetas will continue to operate as a startup under the VMware umbrella and plans to integrate the software more tightly into the VMware product suite.

More Than Just Big Data Analytics

The leading providers of big data analytics are Hewlett-Packard (NYSE:HPQ) and International Business Machines (NYSE:IBM), but VMware’s foray into this space might not be to compete with the leading players. The strategic target of these acquisitions is most likely Amazon (NASDAQ:AMZN) and OpenStack. The Platform-as-a-service offering can be greatly enhanced if it came with a built in analytics tool such as the one provided by Cetas.

By integrating this into vSphere, it makes the bundled offering cheaper to run than say deploying an application on Amazon Web Services and buying an analytics engine on top of that. Integration may be an issue as well so the combined offering will seem more attractive to most buyers. [2] We expect sales of the platforms to improve because of this acquisition and it is unlikely that analytics will be a major source of revenue in the short term.

We have a $109 Trefis price estimate for VMware, which is slightly above the current market price.

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Notes:
  1. VMware Community Blog, communities.vmware.com , 24 April, 2012 [↩]
  2. VMware acquires Cetas, Weaponizes Cloud Big Data, www.servicesangle.com, 24 April 2012 [↩]