VMware buys investment stake in Terremark

VMware has decided to buy a $20 million stake in IT infrastructure services company Terremark. That represents a 5% investment in the company spread over 4 million shares. The deal comes amid much upheaval in the virtualization market as other large vendors such as Citrix and Microsoft jockey for position in the growing arena. What was once a space for only the server crowd has now spilled over into the desktop market and is quickly gaining steam underneath the cloud computing movement.

According to Terremark's CEO, Terremark utilizes VMware within his company's offerings. He sees this investment as a strong show of support from one of Terremark's strategic partners. Terremark offers services such as data storage and operating systems management. They also offer internet exchanges. Terremark is based out of Miami.

What does this mean to the overall virtualization market? Probably nothing. This is no different than Microsoft sponsoring or investing in a partner whose product leverages some Microsoft technology. Providing funding for partners allows large companies like Microsoft and VMware to gain larger market share as their partners' products take root in customers' infrastructures. It is hard to say whether this investment with Terremark was to grab more marketshare, or to defend a gradually receeding market share now that Citrix and Microsoft, among others, are flourishing in the space. Either way, market share is the only way to turn a product into a cash cow; just ask Microsoft. The difference in today's market is that Microsoft was late to the game and now the cash cow belongs to VMware. It will be interesting to see what Microsoft can accomplish by throwing massive amounts of money at the problem.

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