Last week, I wrote about Cavium's acquisition of MontaVista. At the time, I mulled over the decision by a processor vendor, Cavium, to purchase an OS vendor, MontaVista. MontaVista is one of the leading providers of commercial Linux and professional services around Linux. I surmised that if I was a competitor to Cavium, I would think twice about working with MontaVista, as my secrets could find their way back to Cavium.
Since that column was written, I had the opportunity to meet with the MontaVista folks. The timing was quite serendipitous, as I arrived just as the deal between the two companies was being finalized.
They went through a story that I've heard before, whereby MontaVista will remain a completely separate entity, maintaining its own sales team, its own officers, and its own offices. They also confirmed my belief that Cavium wants to get more involved in the consumer-electronics market. MontaVista is already a key player there, so the acquisition provides an immediate entry.
For better or worse, I was left with the decision, at least in my own head, of whether I believed the story. And then going to the next level, even if I believed the story, would it remain unchanged over time.
Then near the end of the discussion, an interesting fact came out, and the light bulb came on for me. Cavium is not in the category of a multi-billion-dollar company. Hence, they must have MontaVista be successful, as MontaVista makes up a sizable portion of the overall revenue of the now-combined companies (I estimated it at roughly 20% to 25% of the overall revenue). If not, it could have serious ramifications on Cavium's long-term health. That single fact made me a believer.