VMware Dives Into Dunes

VMware cranked up its desktop virtualization strategy here today, buying Swiss software startup Dunes for an undisclosed sum. (See VMware Acquires Dunes.)

Dunes is one of a number of vendors, including Kidaro and Citrix, that lay claim to managing desktop virtualization. (See Desktop Virtualization Brokers Emerge, Wanted: Virtual Desktop Services, and Insider Eyes Virtual Desktops.) The Lausanne, Switzerland-based startup, which was founded in 2001, characterizes itself as a "process automation" supplier because it ties "runbook automation" software to virtually any business process.

451 Group financial analyst Brenon Daly told Byte and Switch that he would be surprised if VMware paid megabucks for Dunes, pointing to recent acquisitions such as Determina, Akimbi, and U.K.-based software vendor Propero. (See Vamping Virtualization, VMware Swallows Akimbi, and VMware Acquires Akimbi.) "Looking back at the three deals that VMware had done before Dunes, all of those were less than $50 million, and we estimate that Dunes was less than that," he says. "VMware has shown itself to be a niche buyer looking for small, selective acquisitions."

Dunes certainly seems to fit this bill. The startup, which has a U.S. office in Stamford, Conn., is said to have around 35 employees and 100 customers worldwide, although it has kept its funding and financials under wraps. "The company was probably somewhere near $5 million in [annual] revenue," adds Daly.

VMware has not yet revealed its roadmap for Dunes, although Raghu Raghuram, VMware's vice president of products and solutions, says it will be tied to its own offerings in this space, such as Virtual Desktop Manager (VDM) and VMware Lab Manager. (See VMworld to Showcase Storage News and VMware Manages Desktops.)The move is just the latest acquisition in the increasingly busy desktop virtualization space and follows Citrix's recent $500 million purchase of XenSource. (See Desktops' Virtual Dance, Citrix Acquires XenSource, Citrix Bags XenSource for $500M, and Xen & the Art of Virtualization.) The Citrix/Xensource deal was perceived as turning the heat up on EMC by opening up a path to server, storage, and desktop virtualization for two of its key rivals. (See Symantec Drifts Into Xen and XenSource Signs Symantec OEM.)

The XenSource acquisition also came hot on the heels of HP's $214 million acquisition of desktop virtualization vendor Neoware, which was an attempt to boost its Linux and thin client businesses. (See HP to Acquire Neoware and HP's Software Spree.)

At least one analyst thinks the Dunes acquisition is a shrewd move by VMware. "Dunes is a really, really good fit," says Rachel Chalmers, a senior analyst at the 451 Group. "VMware didn't have any automation software [and] Dunes gives them an orchestration platform."

Certainly, Dunes has been getting closer and closer to the virtualization giant over recent months. Its latest announcement of Dunes Virtual Service Orchestrator (VS-O) version 3.1, for instance, is designed to work on top of VMware's Virtual Center or Microsoft's Virtual Server. (See Dunes Adds Web 2.0.) Dunes also made workflow engine improvements, added support for various directories, and upgraded performance for its software in these environments.

At this stage, it is not clear whether Dunes CEO Robert Laurie and the rest of his management team will be moving over to VMware as part of the acquisition, although the startup's CTO, Stefan Hochuli Paychere, hinted that this is a possibility in a statement released this morning.