VMware discontinues Datrium hardware and hyperconverged OS, effective immediately VMware has killed off the hardware products offered by recently acquired Datrium. Datrium initially had ambitions to become a hyperconverged infrastructure player, but developed strengths in disaster-recovery-as-a-service that caught VMware’s eye. Virtzilla’s announcement of the acquisition said it would “expand the current …
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Obviously what we need are stringent consumer protection laws that absolutely ensure that the only thing that can happen after a company is acquired is that the company's business is carried on as usual for years and years thereafter as if nothing had happened. After all, it's not as if people buying computer products can always be aware that the company they're buying from is a potential acquisition target. Thus, this potential source of risk when making a purchasing decision needs to be totally eliminated, without any half-measures.
So lets walk through this:
A startup burned through 180 million dollars. They got a few hundred customers maybe and were going to run out of money. The options were.
1. They run out of money and shutdown. (Maxta)
2. They get bought by someone who keeps them around, but only 2 support people are kept through the transition to the new company (Tintri)
3. VMware buys them, and keeps 100% of the engineering and support staff, gets the next release out the door, takes one last order, and honors all the existing support agreements and allows fresh 3 year extensions.
You are saying that you want laws created to prevent #3 from happening, and you don't think #1 is going to happen instead? Unless your law FORCES all companies to be bought by another company (which I'm not sure how that happens) you'll see more companies just shut down.
As this law would make most acquisitions unprofitable, this also means there will be less VC for new startups (if the only exit is IPO, we are going to see 80% fewer startups). The end result would be startups with edgier ideas would just be founded outside of the United States in a place with friendlier laws.
Another solution would be:
Require startups disclose their current burn rate, and cash reserves to customers upon request.
Sorry, the party at fault here is Datrium. They were still selling the product to new customers even though the likelihood of their being in business much longer was zero percent. Yes, it’s what VC funded startups often do, keep selling til the last light goes out and leave the customers in the lurch, but it’s not the buyer’s fault for picking up some of the pieces when the music stops.
The narrative that “bad big company” bought “hot little competitor”, fired everybody, killed their amazing product and hurt their customers... is nonsense in this case. And many cases like it.
Datrium was dead in the water with no money and no way to get enough money.
Datrium likely had 100-200 customers. After many years. Any recent new customers buying Datrium were running with scissors around the swimming pool wearing a blindfold. One should not be entirely surprised that it came to a sudden and inglorious end.
Anybody who thinks Datrium was a “competitor” for VMware, that they bought to shut down because Datrium was a threat, is high on crack. VMware did this as an asset deal for pennies per dollar of invested capital, for the engineers, some patents, and maybe a few bits of code. They did these guys a favor. This was not a strategic deal. Ignore the press releases on acquisitions like this.
I worked at Datrium for a couple years and the place was a joke. The tech was decent, but they thought they were going to be a real competitor in the HCI space. They even tried to differentiate themselves by calling it "Open Convergence" but nobody bought into that. They were just another piece of HCI kit. It wasn't until the pivot into DRaaS that anybody gave a damn about them, but that was too little, too late.
After a couple years, I could tell the place was going nowhere. Several of the people who left around the same time I did commented that Datrium would never be worth more than a few very hundred million, and knowing what they got acquired for, even that was overly generous.
I don't blame VMware for picking up Datrium's IP for a bargain basement price. It was a smart move on their part. I also think it's a smart move on their part to gut the hardware and just take the software IP and integrate it into their own products. In the end, Datrium's solution wasn't worth much, otherwise they would have sold more and been acquired for more. They were just yet another wanna be storage player who ended up in the trash bin. Good riddance.
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