Cloud computing is in the middle of a hot technology cycle, which means big technology companies wanting to build cloud platforms are still on the lookout for acquisitions.
No one platform dominates the cloud so far, but several companies are in the running to try, including IBM, HP, CA Technologies, VMware, Citrix, Microsoft and Google, among others.
CA has been the biggest acquirer so far. CA's new CEO William McCracken, who was appointed in January, will reportedly spend $300 million on cloud acquisitions this year and again next year, and "has embarked on an aggressive investment program to gain leadership in the key markets that underlie [CA's] growth strategy," the company said in January.
HP, however, has done the biggest deal, winning virtualized storage vendor 3Par in September for $2.4 billion in a bidding war with Dell.
"There's been a long list of acquisitions in the last 12 to 24 months, especially on infrastructure from software and network and storage," said Bryan Wolf, managing director of Intel Capital, which has made several investments in cloud startups. "The opportunity is presenting itself in both public and private cloud environments, and each vendor is jockeying to figure out how to provide the most complete solution to customers.
"Some of these vendors, though, may be trying to address gaps in their own product portfolios, so a company may be highly desired by them but not required by anybody else," Wolf added.
Among the more recent smaller acquisitions are Intel investments TriCipher and VirtualLogix -- TriCipher, which was acquired by VMware, manages access and authentication for SAAS applications; while VirtualLogix, which was acquired by Red Band, allows multiple operating systems to run concurrently on either Intel or ARM processors
"None of these guys are big enough to be bringing in customers or immediate revenue," said James Staten, an analyst at Forrester Research. "Often times these companies are caught with technology they thought they could grow, and it's not that easy. A lot of the due diligence these big companies go through with mergers and acquisitions is to try to weed out the niche play, but it's nowhere near an exact science.
"With these bigger vendors, the sales guys need something new to sell and get attracted to these offers. Also, if a prominent sales rep loses a deal to a startup and is seeing traction with that product, he'll promote it to the M&A group," Staten said. "Almost everybody's exit strategy now is to get acquired."
Popular technologies for acquisition include storage, data management, virtual machine management, performance management and security - the more automated, the better.
"Clouds create better agility and faster innovation for enterprises - they remove bottlenecks," said Peder Ulander, the chief marketing officer for Cloud.com, a startup that Ulander says lets businesses build Amazon-like infrastructure for their data centers to orchestrate servers, networks, storage and other cloud resources. "It's an order-of-magnitude shift in efficiency and economics, and that's why it's hot."
Ulander said that while it's too early for Cloud.com to be approached about an acquisition -- the company only came out of stealth mode in May -- it's accumulating partnerships rapidly.
"I've done startups most of my career, and this is the first time it's happened so quickly," he said. "At VMworld (held in San Francisco in August and September), we demonstrated our platform running with NetApp, and NetApp is making very aggressive moves in the cloud and instantly wanted to work with us. It's a fun space."