VMware to Acquire B-hive Networks to Further Enhance Virtualization Platform with Application Performance Management

Customers Gain Critical Insight and Control of Application Health and Performance, Ability to Proactively Manage to Service Level Objectives

PALO ALTO, Calif., May 28, 2008 — VMware, Inc., (NYSE: VMW), the global leader in virtualization solutions from the desktop to the datacenter, today announced it has entered into a definitive agreement to acquire B-hive Networks, Inc., a privately-held application performance management software company with headquarters in San Mateo, California and principal R&D facilities in Herzliya, Israel. With this acquisition, VMware will leverage the B-hive team and technology to offer proactive performance management and service level reporting for applications running within VMware virtual machines - on both servers and desktops. In addition, B-hive's R&D facility and team will form the core of VMware's new development center in Israel. The terms of the acquisition, which is expected to be completed during the third quarter of 2008, subject to customary closing conditions, were not disclosed.

“As customers increasingly standardize on the VMware platform to run their business-critical applications, it is critical for virtual infrastructure administrators to ensure the performance of applications from an end-user’s perspective,” said Stephen Herrod, Ph.D., chief technology officer, VMware. “B-hive’s agentless, virtual appliance-based approach goes beyond traditional monitoring approaches to proactively manage application performance to specified levels.  These capabilities, combined with VMware’s proven virtualization platform, can allow our customers to consistently deliver on their application service level objectives. For example, if B-hive identifies degradation in application response time, it can remediate the problem by automatically instructing VMware Infrastructure to adjust the resources allocated to the application or provision an additional virtual machine with an additional instance of the application.   In conjunction with VMware’s automated IT service delivery and business continuity capabilities, B-hive’s service level management capabilities further deliver on the vision of an automated, always-on, virtual datacenter.”

Founded in 2005, B-hive has a unique solution that gives infrastructure groups visibility into application performance in virtual environments such as end-user transaction response time, virtual machine utilization and cross-virtual machine dependencies. Unlike OS-based performance monitoring products, the B-hive solution is designed to measure performance across multi-tier or service-oriented architecture applications that are distributed across clusters of ESX hypervisors and virtual machines. A “Best of VMworld” finalist at VMworld 2007, B-hive’s flagship product, B-hive Conductor, not only monitors end-user performance and issues service level reports, but can also proactively resolve application performance problems by automatically triggering actions such as dynamically allocating more resources, migrating the application to a different server, provisioning additional VMs, changing transaction routing, or system re-boots.

B-hive Conductor is agent-less, packaged as a virtual appliance and provides open, standards-based interfaces.   By integrating with B-hive, enterprise application management products can provide a holistic view of service levels across physical and virtual environments. VMware’s management partners will now have enhanced ability to manage business services across the enterprise by leveraging service level metrics for applications in a VMware virtualized environment. For more information about B-hive, please visit www.bhive.net.

"VMware has been a trailblazer in the industry and has given organizations a much better way to plan and execute their IT operations through virtualization, and we are excited to join this winning team," said Yoav Dembak, CEO and co-founder of B-hive. "As customers move from the physical to virtual, our combined solutions will provide even greater visibility into the performance of applications and make it possible to resolve a problem before it occurs.  Our shared goal is to improve the end user experience and maximize the value of investments in VMware virtualization.”

“With this acquisition, VMware gains a unique solution that solves real-world problems, and adds a highly talented engineering team who shares our passion for innovation,” added Herrod. “We expect the B-hive R&D team to be an integral part of our new development center in Israel.”

About VMware

VMware (NYSE: VMW) is the global leader in virtualization solutions from the desktop to the datacenter.  Customers of all sizes rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and go green. With 2007 revenues of $1.3 billion, more than 100,000 customers and nearly 14,000 partners, VMware is one of the fastest growing public software companies.  VMware is headquartered in Palo Alto, California and on the web at www.vmware.com.

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Forward-Looking Statements

Statements made in this press release which are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate, but are not limited, to the timing and consummation of the B-hive acquisition, customer adoption of new virtualization software and establishment of our new development center in Israel.  Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) satisfaction of closing conditions for the B-hive transaction; (ii) adverse changes in general economic or market conditions; (iii) delays or reductions in consumer or information technology spending; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by our competitors; (iv) our customers’ ability to develop, and to transition to, new products, (v) the uncertainty of customer acceptance of emerging technology; (vi) rapid technological and market changes in virtualization software; (vii) changes to product development timelines; (vii) our ability to protect our proprietary technology; (viii) our ability  to attract and retain highly qualified employees; and (ix) fluctuating currency exchange rates.  These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including the report on Form 10-Q for the fiscal period ended March 31, 2008, which could cause actual results to vary from expectations. VMware disclaims any obligation to update any such forward-looking statements after the date of this release.