In a Big Mobile Move, Pivotal Buys Xtreme Labs for $65 Million in Cash
In a bid to up its mobile development expertise, the Web-focused software company Pivotal has made its first acquisition: Xtreme Labs.
San Mateo, Calif.-based Pivotal, which started its life as a joint venture of EMC and VMware, did not disclose the price it paid for the Toronto-based mobile development and strategy shop that has built apps for Microsoft, Groupon, IAC and others. But sources close to the situation said Pivotal paid $65 million in cash for the privately-held Xtreme, a price which does not include another large pool of stock incentives for the staff of 300.
Led by former Microsoft exec and VMware CEO Paul Maritz, Pivotal is seeking to take advantage of companies that are increasingly turning to cloud-based software alternatives for critical data management services and other needs. Some estimates think the current $8 billion market for cloud-based application and data infrastructure software and platform-as-a-service products could more than double by 2017.
Increasingly, mobile development is a key part of the package these services must offer businesses, which is why Pivotal was interested in acquiring a large team to develop mobile offerings for enterprise customers that it has dubbed “agile application development services.”
In a statement, Pivotal’s Maritz noted that, “every enterprise today is thinking about mobile, which is arguably the most strategic opportunity for our customers today. Mobile requires new ways of thinking and working, and the need to get it right the first time and every time.”
In an interview, Xtreme’s Amar Varma said it was important that its development team was looking for an even larger landscape to take advantage of in mobile.
“There is a real change happening in the enterprise that requires expertise in mobile, social and big data, all driven by the move to the cloud,” he said. “Consumers already experience this, but the bigger opportunity is to take it to businesses in a significant way.”
Xtreme, which was founded in 2007, has been working on several workplace products in the arena already. It got a $20 million investment commitment last fall from longtime tech investor Chamath Palihapitiya of the Social+Capital Partnership, who bought a majority stake with personal funds.
At the time, Palihapitiya even noted that Xtreme had built a “Pivotal Labs for mobile.”
Leo Spiegel, SVP of strategic and corporate development at Pivotal, said in an interview that this ability to accelerate in mobile was key for the purchase.
“We want to be a dominant platform for enterprise solutions and enterprises that want to communicate with consumers and offer them easy applications on all of the major platforms,” he said. “The next generation in the space requires that, so we are going to continue to look at lots of opportunities like this.”