IBM’s purchase of San Francisco, California-based Micromuse continues the consolidation in the systems management space and occurred after Micromuse realized it did not have the breadth to deliver consolidated solutions, according to the company’s chairman and CEO, Lloyd Carney.
As a standalone company the challenges we faced competing with the likes of IBM Tivoli made us realize that the best place for us was as part of a [larger] organization, he said. For us to really address the market – there’s some emerging markets here – we really don’t have the breadth.
Carney highlighted opportunities in emerging geographic markets such as Eastern Europe and Asia, but also noted the consolidation of video, voice and data traffic on both service provider and enterprise networks, as well as other areas such as storage and business process management.
Customers more and more are buying a comprehensive solution, and they want to buy it from a single vendor, he said, noting the recent acquisition of network diagnosis specialist Smarts Inc by EMC Corp, and the purchase of network management vendor Concord Communications Inc by CA International Inc.
With rumors that IBM might not have been the only bidder for Micromuse, Carney declined to comment on the process by which Micromuse settled on IBM as its new home, but said details would be revealed in Securities and Exchange Commission filings.
IBM has made us an offer that we’re thrilled with, he said, declining to answer a conference call question about the potential for counter-offers. We can’t make any suggestions about what might or might not happen down the road.
IBM Tivoli general manager Al Zoller was certainly more cautious than acquiring vendors usually are about the customary regulatory approval and closing conditions. His tone was one of if the deal closes, rather than when.
That can perhaps be put down to caution, but with Hewlett-Packard Co on the look-out for acquisitions to boost its OpenView systems management portfolio, it could also be a matter of IBM showing its cards.
Either way, Zoller talked of the importance of marrying service management policies to Voice over IP and video traffic in order to offer a complete picture of application, systems, and network performance, and noted Micromuse’s focus on building network monitoring capabilities for key protocols such as Session Initiated Protocol, the IP Multimedia Subsystem, and 802.11.
These are capabilities that would have quite frankly have taken a long time to develop organically, he said. Assuming the deal does close it will do so in the first quarter of 2006, and Zoller said IBM would not be giving details on a potential roadmap until the deal closed.
He would say that Micromuse will become part of the Tivoli systems management business and that the majority of Micromuse’s 650 employees are expected to transfer to IBM, however, and also noted that both Micromuse and IBM’s Tivoli business are growing. Micromuse announced revenue of $160.8m for its fiscal year ended September 30, 2005, up 10%, and net income of $17.1m, up 24%.
