Why would a highly-diversified Enterprise CMS technology corporation with licensing revenues in the billions of dollars be interested in a tiny company that specializes in support software for open source projects?
TechFlash is reporting that EMC, owner of enterprise content management leader Documentum and virtualization pioneer VMware, is reportedly satisfying its almost unquenchable thirst for acquisition by adding Seattle-based open source support suite provider SourceLabs for an undisclosed fee. SourceLabs is all about supporting tools for Linux and other open source software.
But Seriously, Why?
- Unlike IBM, or even Oracle, EMC is not known as an active supporter or contributor to the open source software community.
- EMC does not have any open source products that could benefit from the services that SourceLabs is known for providing.
- According to TechFlash, SourceLabs is struggling financially due to a number of customers in the financial services industry.
- SpikeSource, one of SourceLabs' primary competitors, is a stronger company and is a player (albeit a small one) in the content management market.
Those are fair points, but let's turn each of them around:
- EMC may not be an active supporter or contributor today, but there is always tomorrow. Sometimes the intellectual capital required for a shift in strategy needs to come from the outside.
- While it is unlikely that a company with billions of US dollars in yearly revenue is going to all of a sudden release the source code to its products, an organization the size of EMC would need the expertise of SourceLabs to support the said mythical open source product.
- If SourceLabs is having money problems, EMC is likely got a good deal on the acquisition. Everyone loves a bargain, even mega corporations like EMC.
- EMC had to have evaluated SpikeSource -- due diligence and all that -- and must have seen something it liked better in SourceLabs profile.
Like Occam's Razor, the simplest explanation is the most likely reason for the acquisition: EMC wants to improve its ability to support its products.
The larger and more diversified a company gets, the more difficult it becomes to support the myriad of product offerings. Have you ever dealt with the support staff of a huge and expensive software product? It can be frustrating and contentious, but you have no choice because:
- There is no comparable developer community
- Support is part of the contract
It could also be that EMC wants to fortify its cloud computing business. With EMC being such a big storage player, its cloud storage strategy includes two offerings -- for the small-business market and for large companies that need the infrastructure for scale in a big fashion.
EMC also has Atmos -- a software platform designed to manage many gazillion bytes of data across many geographic locations. Unveiled in November, Atmos can either be purchased by itself and run on x86 servers virtualized with VMware, or purchased in a bundle with EMC's Hulk hardware offering, which combines x86 servers with high-capacity, low-cost SATA drives.
As competition gets fiercer in all of EMC's markets -- storage, enterprise content management, virtualization, etc. -- customer support could be the difference between meeting Wall St.'s lofty expectations and disappointing the shareholders.