Although the knickknacks have long since been packed up from VMworld earlier this month, one rumor continues to make the rounds. Several sources have indicated that VMware, the host of VMworld in Las Vegas, has acquired startup Blue Lane Technologies for about $15m. The two companies have been technology partners for more than a year, with Blue Lane’s VirtualShield integrated with VMware’s VirtualCenter.
Security and virtualization in general have been major concerns for VMware. To help shore up the hypervisor and broader virtual environment, VMware in March introduced VMsafe, a set of APIs that third-party security vendors can use to write interoperable programs. Blue Lane was one of about 20 initial partners in VMsafe, as were the security industry’s heavyweights.
If indeed Blue Lane has been acquired (as one industry source and two financial sources reveal is the case), then it marks the end of a company that got its start more than six years ago. When we initially checked in with the vendor shortly after it rolled out its first product three years ago, the Cupertino, California-based company was shipping a patch management appliance. Along the way, it received some $18.4m in two rounds of funding. Remaining startups that are focusing on securing virtual networks include Catbird Networks and Reflex Security.
Selected VMware acquisitions
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Source: The 451 M&A KnowledgeBase *Estimated deal value
why would VMware do this? They acquired a very similar technology in Determina and have done nothing with it. Buying BlueLane would appear to be duplicating the prior purchase. What would they do different this time?
Hi Eric — While the two companies had some overlapping technology (to some degree) we suspect this deal was more financial then tactical. Our understanding is that Blue Lane was out of money and had been looking for a buyer since early summer.
I heard it was less than $10M and I still think they over paid. As for duplication of technology, I dont see it. Bluelane was unsuccessful with their “virtual patching” technology. I dont see it being any better when envoked by Vmware. The underlying packet inspection technology is a commodity and should not need to be purchased. Suspect a VC favor more than any real need for VMW to buy their technology.