The deal is valued at an estimated $66 million in cash and is expected to close in August, sources familiar with the plan said. CenterRun's software will bolsterto unite groups of computing, storage and networking equipment into a single resource that's easy to manage, efficient to use and quick to adjust to changing needs, Sun said.
Sun has signed a definitive agreement to acquire CenterRun, said Yael Zheng, senior director of N1 marketing. She declined to comment on specifics, but said the company expected to close the deal as soon as final details are ironed out. CenterRun didn't respond to requests for comment.
CenterRun sells "provisioning" software, an emerging technology used to let administrators--and eventually, automated management systems--send software from a central administration system to a company's computers. While Sun already sells software that lets administrators handle some basic provisioning, CenterRun's technology is geared to controlling higher-level software, such as that for running Java applications, databases and Web sites.
"I think this will fit nicely in the services provisioning and application provisioning area," Zheng said of CenterRun's software.
Part of Sun's direction for N1 has been to replace ad hoc administrative procedures--such as making sure a particular software package is installed before loading another--with an automated process. CenterRun's technology can do just that sort of thing, with a central engine called the master server running tasks that previously had been recorded as manually written lists of instructions called scripts.
CenterRun's server software can record, compare and change the configuration details of server software from Oracle, Sun, Microsoft, Apache, BEA and IBM, the company said.
"Configuration management is an absolutely critical component of any next-generation systems management framework," said RedMonk analyst James Governor, who predicted Sun and its competitors all will be jockeying for position in the area in coming months.
Sun arguesof the pack, but its core initiatives . For N1, for $167 million in stock. It then for $30 million in cash.
"Sun seems to be moving toward buying much of their N1 infrastructure. They seem to be putting themselves into a role that's more of an integrator than creator of all the individual components," Illuminata analyst Gordon Haff said.
Sun now argues acquisitions are an economically smart strategy.
"You're going to see a lot of interesting little technology acquisitions," said Sun Chief Executive Scott McNealy last fall, regarding the company's plans to build N1. "It's much more interesting now compared to two years ago. You can actually get something of value."
The acquisition of CenterRun should help Sun expand N1 beyond "virtualization," another crucial technology that makes it easier to move software between different computing devices, Summit Strategies analyst Tom Kucharvy said.
"It sounds like a good move and a reasonable price," Kucharvy said. "They certainly had built up some of their virtualization capability with their first two applications in this area, and provisioning is really the next step."
Sun's rivals have relied on acquisitions as well.in May for its plan, while Veritas expanded its management software plans with acquisitions in 2002 of .
Provisioning is one of the foundations not just of N1, but also of competing utility computing initiatives such as IBM'sand Hewlett-Packard's Utility Data Center and . With provisioning, a company experiencing a heavy load on one type of server--a loan company on a day when interest rates drop, for example--can set up new servers to accommodate the traffic.
Eventually, the vision is to automate this process so new servers will be fired up or shut down not just according to demand but according to "service level agreements." These so-called SLAs are contracts under which a server customer can pay a certain fee and be assured of certain performance.
The move seems to dovetail well with Sun's existing software, Illuminata's Haff said.
"It looks like it fits in with where Sun's going," he said. "It would seem, conceptually, that Terraspring is the base provisioning platform and that this would fit at the higher level," provisioning applications and meeting service requirements.
CenterRun's product, first released in 2002, initially was able to control only servers running Sun's Solaris operating system but has expanded to include IBM's AIX, Linux and Microsoft Windows.
Sun has a software product calledthat can be used for some provisioning tasks. However, it only works with Solaris servers at present, according to RedMonk's Governor. In addition, Haff said it's best only for the more limited task of installing a standardized, prepackaged set of software.
Prominent CenterRun customers include VeriSign, Kaiser Permanente and Genentech.
CenterRun is not alone in making this kind of provisioning technology, Governor said. Aduva is a competitor and has a partnership with management software stalwart . Hewlett-Packard has an agreement to use software from Altiris. In addition, IBM researchers are working on the technology, Governor said.
CenterRun, based in Redwood City, Calif., was founded in 2000 by CEO Aaref Hilaly; Basil Hashem, senior director of product management; and Michael Schroepfer, chief software architect. Sequoia Capital and Lighthouse Capital Partners participated in an $11 million investment in the company in February 2002, and Sequoia was joined by Crosslink Capital and Needham Capital Partners in a $12 million second round of funding in June 2002.
One CenterRun board member is Sequoia's Michael Moritz, a Silicon Valley powerbroker who has invested in companies including , Google and Flextronics.
CenterRun has a professional services staff, who can help customers convert their manually written scripts into actions the CenterRun software can automate.
Professional services will help Sun compete, Haff said. The company lags behind IBM in that area and probably HP as well, but the company has been trying to expand.
"Sun has had this focus on 'We really like to do everything with technology.' That's a great tagline and a great goal to strive for. If one company does something by throwing people at it, and the other company can do it with cleverly engineered products, the second company is going to be a lot cheaper," Haff said. "The problem is, when you're talking about the early days of product capability, the reality is you need a lot of services."
Sun now faces the challenge not just of integrating CenterRun's technology, but also of making a persuasive case for N1, Kucharvy said. IBM and HP both focused on technology as a selling point when they launched their own utility rivals to N1, but switched to highlighting business advantages such as flexibility.
"When you really look at a company's dynamic computing strategy, the technology execution is really only one small component of what is going to be required to succeed," Kucharvy said. "You've got to have the business case and show how it's going to address business goals as well."