HP Acquires Open Source Tool Provider Eucalyptus

September 12, 2014

in Acquisition, Fundraising, Marketing

The biggest news in our market this week was HP’s acquisition of the open source tool provider Eucalyptus (read the HPCwire article here). I have written before about how proprietary tools and enterprise software license sales are a dying breed.

The winning model is to maintain useful open source tools for a market that seeks freedom from proprietary frameworks. Then, as users begin to rely upon the open source frameworks, the companies that maintain those frameworks will have plenty of opportunities to indirectly monetize their efforts.

The CEO of Eucalyptus, Mårten Mickos, has been a thought leader on open source tools for many years, famously working on MySQL. He has written before about vendor lock-in which I will discuss in more detail tomorrow.

As our economy grows more connected and social, look to see open source business models continue to disrupt enterprise, proprietary incumbents.

Unfortunately the terms of the acquisition were not disclosed, but a couple of signs make it appear to be a successful outcome for the startup:  1) a more natural acquirer for the company would have been Amazon so there was likely some bidding action going on for the company to ultimately be bought by HP and 2) the CEO of the startup is assuming an important role within HP and the startup is becoming an essential part of HP’s cloud business unit. They had raised $55.5 million in venture capital prior to the acquisition.

What are your thoughts about HP’s acquisition this week?

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