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VMware Stock Takes Off on IBM Pivotal Cloud News

Stocks in this article: IBM VMW AMZN RAX RHT EMC GE

NEW YORK ( TheStreet) -- IBM (IBM) said today it will integrate Cloud Foundry, an open-source product of VMware's (VMW) Pivotal Initiative, into its Open Cloud architecture and help govern the platform.

VMware's stock shot up overnight as the news filtered out to traders, but it's not clear how much of a boost to revenue this deal will actually provide. That's partly because Cloud Foundry is open source, and while VMware moved 500 of its people to the Pivotal development team at its launch, anyone can in theory download the software and use or enhance it.

Plus, VMware has only a 30% stake in Pivotal, and IBM will be selling its own commercial version of that kind of product in competition with VMware.

VMware launched the Platform as a Service (PaaS) in April 2011 under the Apache open-source license. It's a collection of programs meant to support quick deployment of applications to the cloud.

"A PaaS like CloudFoundry asks for the application, gives it a name and runs it," said James Watters, head of the Cloud Foundry product group at Pivotal. "PaaS lets you focus on business logic."

By contrast, a service like Amazon (AMZN) Web Services merely provides basic cloud infrastructure. It's called Infrastructure as a Service, or IaaS.

Users then have to choose an operating system, specify such things as security and storage options, and then write programs for it. The simplest way to visualize it is that a PaaS makes an IaaS easy to use.

With the latest release, Cloud Foundry Version 2.0, IBM is joining the project's community, aiding the project's governance, and announcing a Build Pack supporting a variety of languages, integrating it into a Websphere product line that supports OpenStack infrastructure and the Linux operating system.

OpenStack is also open source, and is now governed independently of its first corporate sponsor, Rackspace (RAX). The Linux IBM supports is Red Hat Enterprise Linux from Red Hat (RHT), which is also a major contributor to OpenStack.

In theory, the IBM-Pivotal news should be a big blow to Red Hat, which has its own open-source PaaS, called OpenShift. But OpenShift is mainly aimed at getting Red Hat's Linux and JBoss middleware onto OpenStack clouds. Cloud Foundry's mission is much broader, offering a collection of Application Program Interfaces, or APIs, that can be extended in any software direction.

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