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Over the past 10-plus years, IBMs Software Group has been one of the most assertive in the industry by purchasing other companies to fill holes in its own portfolio. The approach is paying off for IBM, which is now the second-largest software company behind Microsoft. Rational, IBMs software unit and the newest member of its family, produced double-digit growth in the first quarter of 2007 and is aggressively pursuing other companies to expand its own offerings. Rational is now purchasing two more companies, Watchfire and Telemagic. Danny Sabbah, general manager of Rational, stated that the fundamental reasons for IBMs recent software investments have been to increase its range of offerings, gain existing market share, enter new markets with a strong offering, and drive growth by adding new revenue streams. One purchase by Rational was BuildForge, a company which focuses on delivering build management solutions, because they have a build management tool with a good track record and BuildForge was already a Ready for IBM Rational Software Business Partner with over 80 percent of its customers using Rational software. New York-based Metropolitan Life Insurance Company chose BuildForge because it did not demand a new shift into a language or a certain kind of method, as it takes existing build scripts and allows you to control them. Sabbah anticipates the same success with Telelogic and Watchfire. The acquisition strategy used by IBMs Software Group has been effective overall. IBM invested almost $5 billion in 13 acquisitions in 2006. According to IBM, in the fourth quarter of 2006, IBMs software revenue growth from 2006 acquisitions was up about 50 percent year-over-year.
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