100 year old M&A behemoth IBM’s shopping list

Guest post from Derek Singleton, ERP Analyst at Software Advice.

IBM Is Looking To Buy Where Will They Shop?

The celebration of IBM’s 100th birthday last month focused the spotlight squarely on Big Blue. In an industry where companies fail all the time, IBM’s ability to stay relevant is impressive. So how does a company like IBM manage to stick around for so long?

As the ERP market analyst at Software Advice, I typically write about trends related to manufacturing software. But IBM is such a fascinating company and so pervasive in the world of enterprise technology that I just had to dig deeper into what’s keeping Big Blue on top of their market. [ML – That and the fact that IBM have said they will spend $20billion on acquisitions in the next 5 years…!]

It’s hard to put a finger on it, but one aspect is definitely their willingness to purchase hot tech companies that mesh well with their portfolio. IBM is never far from a conversation about tech M&A – and for good reason. They completed over 100 acquisitions in the last decade alone. Their purchases span the entire map of enterprise technology – from professional services to data management to application performance management.

With much of the media focus squarely on IBM’s history recently, I thought it’d be fun to try and divine their future. I honed in on their M&A strategy and decided to dig deeper.

The first order of business was pulling together the last ten years of purchases. Putting this into a spreadsheet didn’t do much to help visualize their history so I decided to make an infographic out of it instead.

To nobody’s surprise, IBM has bought a lot of professional services (14 to be exact) in the last ten years. Another obvious area of focus is in business analytics, which includes the $5 billion purchase of Cognos.

After laying it all out, it became pretty obvious that they like to purchase fairly deep in the technology stack. I looked out at the landscape of companies working in the vast infrastructure market and started to come up with potential targets.

Here are a few of the markets I can see IBM shopping in:

  • Network & Service Assurance
  • Virtualization
  • Data Warehousing

Network & Service Assurance

This is one area that hasn’t been a huge focus for IBM but it makes sense given their presence in the data center. In fact, it’s one of the few areas that they don’t manufacture their own products in. Their purchase of Blade Networks in 2010 could be a sign that they are going to change that.

In this market I see two targets that IBM could go for, Juniper and Brocade. I think IBM goes for Juniper if they are looking to compete with Cisco and HP (who just bought 3Par). If they want to get in the market but don’t want to tarnish their existing relationship with Cisco, Brocade is a reasonable play and would send fewer shockwaves through the networking community.


IBM has stood by while their competitor EMC has dominated this market. Of course IBM has supported EMC’s virtualization competition, but it hasn’t had much of an impact. Instead VMware has only grown more dominant.

I think Citrix is a viable target for IBM if they want to step up their game in virtualization. Citrix is no stranger to M&A themselves and could bring a lot of technology beyond virtualization to the  IBM portfoilio. On the other hand, IBM may just make an offer to EMC to own VMware. This is a little bit out there because it would be such a costly move, but IBM is one of the few companies that can actually make such a deal happen.

Data Warehousing

Analytics is such a focus for IBM that it’s hard to imagine a scenario in which they don’t continue carving out territory in this space. The future is in big data. We’re drowning in data today and it’s just waiting to be mined. Who better to hammer down this market than Big Blue?

Informatica is an attractive target for IBM. They excel at data warehousing and have integration features that fit well into IBM’s middleware portfolio. At a market cap of $5.7 billion it wouldn’t be cheap, but it’d be worth it. A little less likely, but even more valuable, would be SAS. Jim Goodnight is getting to retirement age these days. If he’s going to let go of SAS there aren’t any other big tech companies that I can see him selling to.

Of course, this isn’t the only area a company of IBM’s scale could shop in. I’ve included some more possible targets on my blog at: IBM Mergers & Acquisitions: Who’s Next? We’re also hosting a poll over there so please stop by and make your voice heard. If you have a better idea than what I’ve listed, feel free to suggest it in the comments section. In a couple of weeks, we’ll be publishing the results.

You can contact Derek directly: Derek Singleton, ERP Analyst, Software Advice, +1(512) 364-0130, derek@softwareadvice.com

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