The Great Hyperic Debate: Is Company Sale Success or Failure?
The VAR Guy is enjoying some healthy industry debate. By now, you likely know that SpringSource acquired Hyperic, an open source systems management company. But the real fun started when Nimsoft CEO Gary Read offered his opinion on the deal.
First, a little background: It’s difficult to measure Hyperic’s success over the years, since the open source company was privately held. Hyperic certainly had its share of customers — including Contegix, a managed hosting provider that raved about Hyperic’s software.
On May 4, Springsource acquired “substantially all of the assets of Hyperic.” Hmmm. What was the valuation? Hmmm. Difficult to say.
The VAR Guy was looking for some unique perspectives about the deal. That’s when our resident blogger stumbled onto opinions from Gary Read, CEO of Nimsoft.
In a May 4 blog entry titled “No surprise – Hyperic fails!,” Read wrote:
Really not a surprise at all. I’ve been saying for a long time that being successful in this space is difficult and my belief is that any “monitoring” company that tries to use the “give the open source away and charge for the professional edition” as its business model will fail. We’ve seen many of these already and they will continue to fail.
And then the reader comments started flowing in.
A Question of Debate
Did Hyperic really fail? Hmmm. That assertion from Read seems to be based on circumstantial evidence rather than hard evidence. But Read is an outspoken, fast-thinking CEO who often shares his thoughts before his marketing and PR teams can find the time to censor him.
What does The VAR Guy believe? He does find it intriguing that Springsource and Hyperic were funded by Benchmark Capital, though Hyperic denies that Benchmark was involved in the deal, according to this Linux Journal article.
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There aren’t enough facts to declare “the deal” a success or failure for Hyperic’s owners. My only speculation is that all parties involved are happy the facts remain private.
On the positive side, there is a degree of success in that Hyperic’s products, technologies and teams continue to have a corporate backer.
My guess is that the Hyperic story is like zillions of others in today’s credit-challenged economy: cash is tough to find. Read’s claim that “you don’t sell your company in this market unless you have to” has merit at face value. It appears that Hyperic needed more capital and it wasn’t readiliy available from anyone other than Springsource.
Capital in this environment is hard to find. Just as investment banks, commercial banks and hedge funds have raised the bar on their investment/lending practices, so have venture capitalists.
Could Hyperic have gotten a better offer? Perhaps. Did they avoid the worst possible failure of a shutdown? Absolutely yes. Congratulations to Springsource, Hyperic and Benchmark for finding a creative solution that keeps the lights on for Hyperic.
I remain optimistic that the Hyperic team can and will contribute valuable technology and shareholder value as other companies continue tinkering with the commercial open source business model.
The VAR Guy appreciates your perspective. Our resident blogger rather enjoys the healthy debate. And he’ll be sure to watch how this deal unfolds.
Bill F
I agree with your perspective. Just for clarification my blog post said “falls” not “fails” – just a single letter difference but somewhat changes the context.
My point is that, it is hard enough to make it as a stand-alone vendor in the “network management” market and particularly difficult if you are based on open source because…the deal sizes are much lower. Companies like Hyperic are finding that out the hard way.
I agree that they should be congratulated for finding a creative solution and, personally I think this is an excellent move for Springsource but I also think that we will see Hyperic no longer be competing in generic monitoring/management deals.
it would be nice if The VAR Guy could read fails vs. Falls
Gary,
“Companies like Hyperic are finding that out the hard way.”
“but I also think that we will see Hyperic no longer be competing in generic monitoring/management deals.”
I am dedicating this poem to you…
Hope springs eternal in the human breast;
Man never Is, but always To be blest:
The soul, uneasy and confin’d from home,
Rests and expatiates in a life to come.
-Alexander Pope,
An Essay on Man, Epistle I, 1733
John
johnmwillis.com
Hyperic maybe be a good product, but their prices are really far from reality being a opensource technology, in fact for countries like Brazil, India etc that wish to get good tech by low prices, unfortunatly is kind impossible paying that crazy pricing…
To be honest, I still would like to use Hyperic Enterprise, but they have to get lower prices if they want to continuing on market…
Full disclosure is required here guys… The debate was kicked off by Gary Read, CEO of Nimsoft a competitor to Hyperic. Nimsoft is also one of the largest advertisers on VARGuy’s sister property, MSPmentor.
This is not an accusation, just an important point to note especially when you see the other FUD that Nimsoft is spreading http://news.cnet.com/8301-13505_3-10233020-16.html?tag=mncol;title
Pay for Play: You’ve caught The VAR Guy in a secret plot to spread Gary Read’s perspectives through viral means across the global Internet.
Kidding aside, disclosures are important. The VAR Guy is owned and operated by Nine Lives Media Inc. (www.NineLivesMediaInc.com). So far, Nine Lives has three media sites (TheVARguy, http://www.MSPmentor.net and http://www.WorksWithU.com). Advertiser/sponsor relationships are clearly indicated on all sites.