CA to buy NetQoS for $200 million

CA Monday announced plans to acquire NetQoS for $200 million, adding application-aware network and systems management products to the software maker's broad enterprise IT management portfolio. The added technology will also boost CA's efforts to manage advanced infrastructures that feature virtual systems and cloud computing environments, the vendor says. "NetQoS technology complements CA's Wily products and will help network and systems engineers better design their infrastructure to ensure application issues don't occur from the start," says Roger Pilc, senior vice president and general manager of CA's infrastructure and automation business unit. "The technologies will help network and systems management be more application aware." The deal, anticipated to close in CA's fiscal third quarter, would augment an already full software lineup grown via previous acquisitions of Wily Technology, Concord Communications and Aprisma. Hottest tech M&A deals of 2009 CA executives say the pending acquisition offers little overlap by way of products and will help CA products diagnose the root cause of application errors within the network and systems infrastructure.

CA executives say NetQoS products, designed for network managers responsible in part for application delivery, will add to the company's Wily products that detect performance problems in the application environment. Customers can visualize the links and relationships between the delivery technologies and the business applications and services with Wily, and understand the real-time application and service activity across those links and relationships with NetQoS traffic flows," says Jasmine Noel, co-founder and principal analyst at Ptak, Noel & Associates. NetQoS tools are able to detect application performance problems using network-centric measures such as traffic flow. "The acquisition is good because NetQoS has a focus on application delivery, so when combined with Wily, it offers a good one-two punch. With some areas of overlap in the former Concord eHealth and Aprisma Spectrum tools, CA's Pilc say the company will work to address issues after the deal closes. NetQoS technology will target network engineers who focus on application delivery where the management of traffic flows is the primary task, rather than the management of thousands of network devices." CA also expects the NetQoS technology to play a bigger role in its virtual and cloud management offerings.

Noel says customers should not expect NetQoS tools to get lost in the shuffle as CA could have targeted plans for each product suite. "In terms of portfolio, CA now has two network performance management solutions, eHealth and NetQoS. But I think CA has specific targets for both solutions," she says. "CA's eHealth technology will target network engineers who spend most of their time managing performance of specialized network infrastructure. With its ability to track flows across virtual and physical elements, NetQoS tools could be coupled with Cassatt assets CA acquired earlier this year, the company says. NetQoS co-founder and CEO Joel Trammel says CA represented the best fit with his company's technology, and customers shouldn't expect any change in products or support as the deal unfolds. With no previous partnerships, the two vendors share some 200 customers and CA's Pilc foresees "very little modification in the NetQoS product set and its approach to customers going forward." That is why NetQoS executives found the deal to be synergistic. NetQoS has more than 1,000 customers worldwide and reported revenue of $56 million in 2008. "We sought out CA because we saw a clear fit with us and the company's success in acquiring Wily, Concord and Aprisma. Industry watchers expect the deal could benefit both parties going forward if CA sales teams focus on the NetQoS suite. "For a small vendor, being acquired could be good because a larger sales force means a bigger pipeline.

We were excited and see the clear fit between tying these acquisitions together," Trammel says. Or it could be bad if it gets lost in the portfolio. Do you Tweet? In the Swainson era, CA has handled its acquisitions fairly well, and with Wily as a tag-team partner I don't see NetQoS getting lost," Noel says. Follow Denise Dubie on Twitter here.  

Skype Founders Sue eBay: What's Going On?

The founders of Skype are suing eBay for copyright infringement, a move that could block eBay's deal to sell a majority stake in Skype to a group of private investors for $1.9 billion. The sale was seen as a big failure because the company was not able to further monetize the potential of the VoIP service in the years to come. eBay purchased Skype back in 2005 for $2.6 billion, but failed to acquire Joltid, the company supplying the core technology behind Skype, also owned by the founders of the VoIP software.

So eBay sold a 65 percent stake in Skype two weeks ago to an investment group for $1.9 billion, managing to get back some of the money it invested initially. At the core of the suit is a peer-to-peer technology called "global index", which is used by Skype's software to route calls over the Internet instead of traditional phones lines. But it's not all good for Skype, as Skype's original founders are now suing eBay, seeking damages for copyright infringement. This technology is owned by Joltid, which is still owned by the founders of Skype. Now moving to the U.S. courts, Joltid is seeking an injunction against Skype, which could affect Skype's operation.

As if it wasn't complicated enough, eBay licensed "global index" from Joltid for continued use in Skype, but Joltid terminated the license in March and have been battling eBay in U.K. courts ever since. The trial could jeopardise the closing of the Skype sale to the private investors, who are also named as defendants by Joltid. What's even more ironic is that that the money Joltid is using to sue eBay is probably the money they got from eBay when they sold Skype. While eBay is working on its own technology to replace Joltid's, Skype could be forced to close down its operation if Joltid wins the trial.

China's Alibaba expects India joint venture this year

Top Chinese e-commerce site Alibaba.com aims to announce an Indian joint venture this year as the company expands its global footprint, it said Friday. A deal in India, where Alibaba.com recently surpassed 1 million registered members, would be the latest in the site's efforts to grow abroad. "I've got a lot of confidence in India," said Jack Ma, CEO of Alibaba Group, the parent company of Alibaba.com. Alibaba.com is in talks with an Indian reseller about forming a joint venture, CEO David Wei told reporters at a briefing.

Alibaba.com is a platform for small and medium businesses to trade everything from lumber and clothes to iPods and PC components. Alibaba.com already works with Indian publishing company Infomedia 18, its likely joint venture partner, to promote its platform in the country. Its main member base is in China, but the site also has 9.5 million registered users in other countries and facilitates many cross-border trades. The site also has a joint venture in Japan and recently launched a major U.S. advertising campaign to attract more users there. Ma said Alibaba knows it needs to "do something" in Latin America as well. Ma and other top Alibaba executives visited the U.S. early this year for meetings with potential partners including Amazon.com, eBay and Google.

When asked if the company would also seek to expand in Eastern Europe, Ma said, "I will be there." Alibaba will not hold a majority stake in joint ventures it forms, instead taking a share similar to the 35 percent it has in its Japan operation. "Our global strategy means partner with local people," Ma said. "We want partners and we want partners to control their business." Users place total orders of more than US$200 million each day on the Alibaba.com international platform, Wei said. About 50 percent of those orders go to Chinese exporters, he said.

Half of new servers are virtualized, survey finds

More than half of new servers installed in 2009 will be virtualized, and that number will hit 80% by 2012, signaling huge growth in the hypervisor market, according to a report released at VMworld by TheInfoPro, a research company.

Slideshow: VMworld product roundup 

The benefits of virtualization and growing maturity of hypervisors is certainly contributing to increasing use. But the economic downturn is also forcing IT to cut back on hardware spending, and many are turning to virtualization to wring more power out of previous server investments.

In 2008, about 30% of new servers were virtualized, says Bob Gill, managing director of search research at TheInfoPro. The data includes all types of servers, although the trend toward virtualization is largely being driven by the x86 market.

"It seems to many people that the party is over, that everyone is virtualizing," Gill says. "But the simple fact is it's just starting to kick in."

The data is based on interviews with IT pros at 195 enterprises in North America and Europe, mainly Fortune 1000-size companies. About 10% of respondents report having more than 1,000 virtual machine instances, and about half have deployed at least 100 virtual machines.

VMware is still dominating the x86 virtualization market, according to IDC. In the first quarter of 2009, 50% of new virtualization licenses deployed on x86 servers were from VMware, and 24% were from Microsoft, according to IDC's Worldwide Server Virtualization Tracker.

The opportunity for Microsoft and others to take significant market share away from VMware may not come until next year, Gill says. That's because VMware's strategy has been to sell large blocks of virtualization licenses to customers, and many customers will have to work their way through excess VMware licenses before they consider switching, he says.

62% of respondents have tested a hypervisor other than VMware's and 30% said they plan to put a non-VMware hypervisor to use.

But that's not to say IT shops are dissatisfied with VMware. Only about one in ten respondents said they are considering switching away from VMware, and nearly every VMware customer expects that the company will still be on its technology roadmap in three years, the survey found. The reality is, many IT shops are choosing to use multiple hypervisors. Nearly one-third of respondents said they will support a mixed set of technologies for x86 virtualization.

"We're going to see a very messy, heterogeneous hypervisor world," Gill says.

Questions about performance and manageability are the greatest impediments to virtualization, but these concerns are not likely to stop the upward momentum.

Customers may choose to avoid virtualizing some transactional-heavy applications like databases, but "nobody ever said 100% of all servers will be virtualized," Gill said.