IBM buying spree
In this month alone, IBM has purchased four software companies for a total of around $3.6 billion, in order to bolster its service offerings in a move away from contracting such features out, as it has done.
The latest announced IBM acquisition is that of US-based Internet Security Systems (ISS) for about $1.3 billion. ISS makes software that helps protect corporate networks fend off attacks over the Internet. The move, according to IBM, is its fifth-largest ever. The forth-largest happened earlier in the month.
IBM is just one of the major computer services companies to acquire significant software security companies. Microsoft, EMC, Juniper, Cisco, Symantec, and CA have all been buying the latest security technologies by snapping innovative companies. Security is the hot growth area throughout the industries, and none of the above companies wants to be at the mercy of its rivals in providing those services. Hence the buying binge.
One analyst is quoted in the Wall Street Journal ("IBM to Bulk Up in Internet Security", 8/24/06) as saying:
The smaller players are going to have to beef up their market share in their niche area to fend off the larger players -- and if they're not successful, they're going to have to seriously look at getting married to larger vendors.
Security analyst and ZDNet blogger Richard Stiennon ("Threat Chaos") explains the timing of IBM's move:
Put simply, the security industry has grown to the point where their markets are attractive to very large corporations that are looking for new opportunities. IBM has diligently looked at the managed security space for over five years. They did not buy Riptech or Guardent, which went to Symantec and Verisign respectively because the industry was too small. Now, as managed services become a big business, fueled by increased interest in regulatory compliance, it is worth jumping in.
What is clear that network security is so integral to computer operations that its life as an independent business is dying? The functions are more and more being built into either network hardware or Servers, or becoming a part of larger network management software suites. The job of configuring software and hardware from various vendors is not one that many sites want to manage themselves. On the other hand, a large number of sites using software like ISS now are wary of getting into an expensive service contract with IBM.
Other recent IBM acquisitions:
- Aug. 2: Webify, a maker of industry-specific service oriented architectures (SOA), such as ones that handle HIPAA compliance for healthcare companies and ACORD standards in the insurance industry. Price not disclosed.
- Aug 3: MRO Software, which makes asset management software fro corporations. Price $740 million.
- Aug. 10: FileNet, which makes software that acquires data from various systems and allows mangers to gather answers to business process questions. The Deal was for $1.6 billion.
