VMware CEO Pat Gelsinger claims that he intends to fix the "broken" cybersecurity market through the firm's acquisition of Carbon Black.
Gelsinger (pictured) made the claim as VMware announced a double acquisition for end-point security vendor Carbon Black, for $2.1bn, and Dell-owned app development vendor Pivotal Software for $2.7bn.
VMware describes Carbon Black as a "next-generation security provider" that leverages big data and behavioural analytics. It claims the security firm has 5,600 customers and 500 partners globally.
The plan is to integrate Carbon Black into VMware's existing security products: AppDefence, Workspace ONE, NSX and SecureState.
Meanwhile, acquiring Pivotal Software will launch VMware into the software and app development space - a new frontier for VMware.
Both acquisitions are expected to close in the second half of VMware's fiscal year 2020 ending 31 January 2020.
Speaking to investors on an earnings call following VMware's Q2 results, Gelsinger said "the security market is broken, and we are out to fix it".
"Security is not effective today. We need a platform approach. Customers have been spending way too much on security and getting way too little security as a result. This is an opportunity to change that market entirely," he said.
"The idea of individual products that are bolted on and patched on is ineffective for customers. So today we're launching a major step to deliver an end-to-end intrinsic security platform, and we see the Carbon Black assets as a huge accelerant and complement to our offerings to do exactly that."
However, some investors are sceptical about whether Carbon Black was the right security acquisition choice for VMware.
VMware's share price fell by more than four per cent in after-hours trading as the news emerged.
One investor on the financial earnings call said Carbon Black was not the "cream of the crop" in its space and suggested that the firm has "struggled at times" in a security market, comparing it with competitor CrowdStrike.
Carbon Black IPOed on the NASDAQ exchange in May 2018 at $24.43 a share. Its shares fell to a low of $12.59 this February before recovering in August.
But Gelsinger and CFO Zane Rowe defended their purchase, claiming that the firm carried out thorough due diligence into Carbon Black's financials and technology.
Gelsinger added that VMware has been partnering with Carbon Black in VMware's AppDefence offering for the last two years, which helped "de-risk" the acquisition.
The CEO also pointed to its 2014 acquisition of security vendor AirWatch as an example where VMware has found success in acquiring a firm that was not widely regarded as a market leader.
"I will also remind you that when we acquired AirWatch, they were not number one. They became number one in the hands of VMware as we improved their execution, scale and distribution as a result," said Gelsinger.
"We firmly believe we can do that again with Carbon Black."
VMware first disclosed that it was in talks to acquire Dell-owned Pivotal Software last week, sending Pivotal's shares soaring by 70 per cent.
Gelsinger said that the timing is right for VMware to acquire Pivotal from Dell, claiming that it adds essential "build" capability to its platform at a time when Kubernetes is "emerging as the de facto standard for multi-cloud modern apps".
"This is a complete stack. There's a build, run, manage stack associated with Kubernetes. VMware, with what we have in the 'run' area, we are already uniquely positioned with what we acquired with Heptio [in November 2018] in the 'manage', but we really did not have 'build' assets. That's where Pivotal comes in to finish that stack," he said.
"Now they're in the VMware family - we are responsible, and we can bring this together in an aggressive way to reach scale and credibility."
The acquisitions were announced as VMware released its Q2 results. For the three months ending 2 August 2019, revenues grew by 12 per cent to $2.44bn, while non-GAAP operating income was $802m, up nine per cent year on year.
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