Both companies focus on Cloud Foundry, open-source software for building new-age applications from the ground up. Cloud Foundry's claim to fame is that applications built using its software will run on nearly all the major public clouds from Amazon (amzn) Web Services and Microsoft (msft) Azure as well as the VMware's (vmw) vSphere running in most companies own data centers.
Terms were not disclosed, but Pivotal chief executive Rob Mee described the rationale for the acquisition in an interview with Fortune. "CloudCredo brings, first off, a really strong presence in the European ecosystem. They have an outsized impact in terms of the customers they work with and the technologies they produce," Mee said.
CloudCredo chief executive Colin Humphreys said his company, founded in 2012, was the first to deploy Cloud Foundry software in production "with SLAs around it." SLA stands for service level agreements, part of an enterprise contract that dictate how success or failure of a given installation can be measured.
CloudCredo was also the first company to integrate Cloud Foundry software with Docker, a popular software container technology, and to deploy Cloud Foundry across multiple clouds, Humphreys added.
James Governor, analyst and co-founder of Redmonk, called the Pivotal-CloudCredo combination "an almost comically good fit."
"Colin Humphreys is essentially a Pivotal true believer ... he just didn't work for them. In just three years the company built a solid reputation, some useful tools, and made an exit. Of course the likes of IBM and HP were almost certainly looking at the firm—which would have accelerated the deal," Governor said via email.
Governor also credited Paula Kennedy, CloudCredo's chief operating officer for driving much of the company's progress.
Mee noted that CloudCredo, which was a small startup, was able to work successfully with big customers using early, not-very-easy-to-use Cloud Foundry code. CloudCredo will now be able to do a lot more with Pivotal's resources behind it.
San Francisco-based Pivotal has about 1,700 employees and sells supported Cloud Foundry into enterprise accounts. It also has an "agile" development business, and a practice focused on big data services. Each generates about one-third of Pivotal's revenue, Mee said. In August, Pivotal said its Cloud Foundry business achieved a $100 million run rate.
Rumor has it that Pivotal was not the only Cloud Foundry Foundation member interested in buying CloudCredo, but neither Mee or Humphreys would comment on that. If true, that means there could have been a lot of possible suitors. Hewlett Packard Enterprise (hpe), IBM (ibm), SAP (sap) are all Platinum-level members of the Cloud Foundry Foundation along with Pivotal, EMC (emc) and VMware.
It's easy to see why acquisition-minded IBM, which built its Bluemix software development platform atop Cloud Foundry, might be interested in CloudCredo. Ditto SAP. HP Enterprise uses Cloud Foundry as its cloud software development platform, but the company has a lot of other irons in the fire in the wake of its separation from HP Inc.
Pivotal claims many name-brand customers across its three businesses, including NBC Universal, Philips, and Humana. But, as mentioned above, it faces competition from some of biggest IT players in the universe, many of which offer their own software development platforms based on Cloud Foundry code.
All of these companies recognize that while big businesses must keep wringing value out of their existing applications, they also require a way to design, build, test and deploy brand-new ones—typically Web-based customer-facing applications.
As part of the deal, which brings CloudCredo's 25 employees over to the mother ship, Pivotal has also acquired the CloudCredo-SU subsidiary, which specializes in Cloud Foundry log analysis.
These are interesting times for Pivotal and the other EMC Federation companies, given that EMC and VMware will likely soon be part of a Dell-owned tech giant.
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This story was updated at 9:30 a.m. EST December 22 with analyst comment.