IBM gobbles up ISS (and 1986 IBM PC spot)

Another day, another IT Blogwatch, in which IBM buys Internet Security Systems. Not to mention IBM's 1986 PC commercial...

Jaikumar Vijayan has the story:

IBM's planned purchase of Internet Security Systems Inc. will add a range of network security and managed services capabilities to its current range of identity and access management products, analysts said today. IBM this morning announced plans to acquire Atlanta-based ISS in an all-cash deal worth $1.3 billion -- the largest acquisition for IBM since its purchase of PricewaterhouseCoopers in 2002.

...

ISS is one of the largest providers of network security products and managed security services in the industry. It sells a range of intrusion-prevention, intrusion-detection and so-called unified threat management appliances under the Proventia brand name. The company also offers a range of services to help companies manage their firewalls and intrusion-detection and -prevention systems. Among ISS's better-known services is its X-Force Threat Analysis, which uses a global network of data centers to give customers advance intelligence on impending threats and attacks.

...

Upon completion of the deal, ISS's operations will become a business unit in IBM's Global Technology Services business. The company's software products will be integrated with IBM's Tivoli management suite

Alan Shimel:

This has been rumored for several weeks, I remember talking to folks at Black Hat about it. In fact I thought the moment had passed and the deal was not going to happen. In any event, it certainly puts IBM right in the middle of the security game like never before ... Did IBM buy ISS for the growing services business in MSSP? ISS for years has been growing more and more services and less and less software revenue. In fact some might claim they were more a services company than a software company ... The real question is what does IBM do with this company.  Do they emphasize the services and research or do they revitalize the product line up.  Time will tell.  It certainly makes for excitement in the security industry though.
Mike Rothman:

The worst kept secret in the security business came to roost this AM. IBM buys ISS for $28/share. I did a quick post on it this AM (here) ... given what seems to be a screwed up organizational plan (ISS will be a business unit in IBM Global Services) - it's not clear what the future of ISS' products business is going to be. So if I were a customer looking at ISS products - I'd be deferring any kind of decision until more details emerge ... It's clear to say that no companies are safe from consolidation and you are either predator or prey. Unfortunately given the recent performance of many public security companies, they all seem to be prey
Richard Stiennon scoffs:

Has there ever been an acquisition that the press did not say was a "sign of further consolidation"? This is a strategic move. If IBM bought EDS, that would be consolidation ... 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 ... as managed services becomes a big business, fueled by increased interest in regulatory compliance, it is worth jumping in. At $50 million plus in services revenue ISS was the next logical acquisition. But how do you justify the $1.3 Billion price tag?
Greg Stierle certainly can't justify it:

This is IBM’s fourth acquisition this month, and its 5th largest of all time, but hey, who’s counting ... From where I sit here in the cheap seats, it looks as though IBM has made its first bad acquisition of the year.  This Purchase is very expensive in my opinion.  IBM is spending $1.3 Billion dollars on a company that earned south of $40 Million last year.  And it’s not growing very fast either.  Revenues are expected to grow less than 10% this year.  IBM earns more on the interest from that cash than they will on Internet Security Systems products and services.  This is certain unless, as they surely expect to, IBM can drastically increase sales through existing contracts and cross sell their products and services to ISS clients.  I’m skeptical that either of these will amount to much ... whatever the strategic fit, the purchase cannot possibly add value.
Dan Farber burps:

IBM has a kind of eating disorder. The company can't stop its acquisition binge ... Like Oracle, EMC and others, IBM is gorging on the smaller, but primary players in spaces adjacent to its core middleware. The total IBM spend for August, if the deals consummate will be around $3.6 billion ... Will IBM move up the stack into applications–not to packaged applications, but to loosely coupled, pre-built components for CRM or other tasks or business processes that can be easily assembled and integrated to solve specific problems? It seems inevitable...
Buffer overflow:

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And finally... IBM 1986 Commercial - Who’s Got Time to Learn Computers?

Richi Jennings is an independent technology and marketing consultant, specializing in email, blogging, Linux, and computer security. A 20 year, cross-functional IT veteran, he is also an analyst at Ferris Research. Contact Richi at blogwatch@richi.co.uk.

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