Over the last few years there has been a lot of fanfare around open source companies and their liquidation events. Most of the news has been around Sun’s billion dollar acquisition of MySQL or the Citrix acquisition of Xen and even Yahoo’s acquisition of Zimbra. In contrast there was little attention paid to the SourceFire. Actually if you ask most open source users about SourceFire they would probably answer “SourceWho?” If you ask open source users if they have heard of ClamAV or Snort they probably would be able to tell you that they are the leading open source software for virus protection and intrusion detection respectively. Recently, SourceFire has been in the news a bit lately as Barracuda Networks has made a bid for their open source competitor. Read the full story

Technorati Tags: ClamAV, Commerical, Community Leverage, MySQL, Open Source, Snort, SoureFire, Sun, Zimbra

I use Zimbra for my mail server and I am happy to see Zimbra now supports CalDAV. This means   you now can sync your calendar for Mac OS X  using Mail.app and iCal without and third-party add-ons. 

To setup a CalDAV account in Mail.app:

1. Go to Preferences > Accounts and click the "Plus" button to add a new account.
2. Set any description, and enter your Zimbra username and password
3. Click the disclosure triangle and enter the server address

4. Click Add and your calendars will immediately start synchronizing.

For those of you not familiar with Zimbra Collaboration Suite(ZCS), Version 5.0 launched earlier this month. The open source edition of ZCS is available here. 

[Thanks to my co-worker Rick Kilcoyne for sharing the tip.] 

Technorati Tags: CalDAV, collaboration, Mail, messaging, Open Source, Zimbra

Is 2008 going to be the Year of the Acquisition? Activity in 2007 was on the rise but now things seem to be at full speed.

• I remember when Alta Vista and Excite! were the hot search engines, my how the world has changed.  It looks like it’s narrowing down to a two horse race with Microsoft putting the moves on Yahoo! for about $44.6 billion (Notes from SearchEngineLand). I guess it’s really on now, Google versus Microsoft in a search engine death match.
• Yahoo! acquired Zimbra last year. I wonder what that means for the "Exchange killer"?
• Amazon is acquiring Audible.com the leading provider of digital spoken word content establishing itself even further as the web’s biggest superstore.
• There were already three open source transactions in January:
• MySQL bought by Sun
• Nokia Buys Trolltech
• Covalent was Acquired by SpringSource
• In preparation Andrew Aiken and the boys from the Olliance Group are ready to help along the deals with their newly formed M&A practice. 

The question now is,"Who’s next and how much?"

Technorati Tags: , acquisition, amazon, Audible, Google, Mergers, Microsoft, MySQL, Nokia, Olliance, Sun, Trolltech, Yahoo!, Zimbra

Dell announced the acquisition of EqualLogic tonight for a pittance… $1.4 billion. The storage virtualization vendor is the biggest acquisition in Dell history:

Under the terms of the agreement, Dell will purchase EqualLogic for approximately $1.4 billion in cash. The acquisition of EqualLogic is expected to close late in the fourth quarter of Dell’s fiscal year 2008 or early in the first quarter of fiscal 2009. The company expects the acquisition to be dilutive to earnings per share, excluding the amortization of intangibles, by $0.02 to $0.05 in aggregate for Fiscal 2009 and Fiscal 2010. The acquisition has been approved by the board of directors of each company and is subject to regulatory approvals and customary closing conditions.

EqualLogic was planning on going public and according to their filing they only made $68 million in revenue last year. That’s a purchase price of 21 times revenue. It’s also been a good year for acquire-es in open source business with a 50-500x acquistion of Xensource and a 60x revenue acquisition of Zimbra . However, it’s amazing to me that we can see so many acquisitions at 20x revenue and up. Maybe it’s my background as a financial guy that makes me go…hmmm.

As I look at these acquisitions I wonder over what time period they will be considered success. If you use a multiplier of 10X revenue for that business that was acquired (which is still generous) that means Dell would have to realize at $140 million in revenue from EqualLogic to recoup their investment in increased stock valuation (which would be diluted in their hardware-centric business so even then it’s not a  great measurement). That would mean Citrix would have to realize $50 million in direct revenue from Xensource and Yahoo! would need $38 million from Zimbra. Maybe you would have to wait until that business threw-off revenue to recoup the purchase price as the measure of success which would take even longer.

I can see EqualLogic enabled by the Dell channel seeing the quickest ROI but I have to wonder over what period we will see Xensource and Zimbra pay-off. On the other side maybe that’s the only way software behemoths can grow and in their case it might be worth it. Food for thought.

Technorati Tags: acquisitions, Dell, EqualLogic, financial, Xensource, Zimbra

Greg sent me this article at the New York Times,"Silicon Valley Start-Ups Awash in Dollars, Again" and Stacy says (via Matt ) Balmer is hunting for Open Source Start-Ups.

"We will do some buying of companies that are built around open-source products," Ballmer said during an onstage interview at the Web 2.0 Summit in San Francisco.

A refusal to consider acquisitions of open-source developers "would take us out of the acquisition market quite dramatically," Ballmer said–a tacit acknowledgment of how thoroughly open-source development has reshaped the software market.

This gets me to thinking…

With the Yahoo! acquistion of Zimbra for $350 million and theCitrix acquisition of Xensource for $500 million is there an impendingfeeding frenzy for open source companies? It wasn’t that long ago thatRed Hat bought JBoss and Oracle acquired Sleepycat. Maybe these are just the beginnings of a bigger trend.

So back to the boys from Redmond, so who does Microsoft buy and why?

Well I would think youneed to discount the database market, they wouldn’t want to competewith MS SQL.They probably would stay away from CRM because of Microsoft Dynamics.

Perhaps they should buy a company for the technology and somethingcomplimentary to their portfolio. Granted a company with a largecommunity might be nice but could be quickly alienated because ofanti-Microsoft sentiment that prevails in many open source communities.What might be even better is an open source software company that theycan take from obscurity and fueled by the Microsoft channel and theirhordes of cash. These are the areas that come to mind.

Systems Management – They could grab a monitoring company since they don’t really have a heterogeneous management solution. I won’t even dive into this for reasons of my Zenoss connection. [Of course there's an idea. ]. They could go big and acquire publicly held SourceFire for their security offerings. With the recent addition of ClamAV to their portfolio maybe Microsoft could pre-install open source virus software on Windows servers. I bet Symantec and McAfee would love that.

• Advertising and Web Marketing – Well they just gobbled up Atlas Solutions maybe they should look at buying someone in open source who’s early stage and can run on Micrsoft server, Loopfuse (Marketing and Sales Automation) or web ad server maker OpenAds .
• Other ideas — Here’s some other creative ideas:
• They could stick it to Google on the search front and acquire Appscio (formerly Avidence) for their video search technology unless they are
  • shedding their open source ambitions with their old name. Alfrescofor document management makes sense, and it runs on Windows. I alsodoubt there is too much anti-windows sentiment in their user base. Maybe take CleverSafe’s p2p storage technology and incorporate their technology with Sharepoint somehow.

funding open source start-ups centered around promising open source projects. Maybe They could seed them in Microsoft’s Codeplex and bring them them up under the rainbow colored Microsoft Windows umbrella.

I guess we’ll have to wait and see.

Technorati Tags: Alfresco, Appscio, ClamAV, Cleversafe, Loopfuse, Open Source, OpenAds, SourceFire, Zenoss, Zimbra