IBM Sets Its Sights on High-End Analytics

If IBM's $1.2 billion deal to acquire SPSS Inc. closes as expected later this year, the company will immediately transform from pretender into contender in the high-end analytics and data mining business, analysts said.

According to market researcher IDC, IBM in 2008 held a 0.5% share of the $1.5 billion worldwide advanced analytics market. Combined with SPSS, IBM would hold a 14.5% share of the market, trailing only SAS Institute Inc.'s 33% share.

IBM said that the SPSS products will continue to be supported and enhanced as part of the IBM Information Management product line, but analysts noted that they will closely watch how IBM might otherwise use the acquired technology.

"The integration of predictive analytics with other analytic or operational technologies is still ahead of us, so there was a lot of value to be gained from SPSS beyond what it had stand-alone," said Curt Monash, founder of Monash Research in Acton, Mass. Whether IBM can spread that value throughout its product lines "depends on the integration road map and execution."

Monash also noted that SPSS's acquisition by IBM represents a missed opportunity for rivals like SAP AG and Oracle Corp.

"[Buying SPSS] would have given [SAP or Oracle] a competitive advantage against the other in the integration of predictive analytics with packaged operational apps," he said.

The companies agreed to the all-cash deal shortly after they jointly announced that IBM had licensed some SPSS technology.

Copyright © 2009 IDG Communications, Inc.

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