As I mentioned in my blog post last week when discussing Informatica’s acquisition of Siperian, there was a rumor that IBM was on the verge of acquiring Initiate Systems. Well today, February 3, 2010, that rumor became reality when IBM announced their intent to acquire Initiate. Financial details were not disclosed, but estimates value the deal anywhere between $300-$450 million.
In that blog post, I suggested the following reasons IBM might consider Initiate:
Initiate has an extremely strong presence in Healthcare with a growing presence in Public Sector. Both of these verticals are expecting major federal stimulus funding, with IT spending and data management as a high priority. Initiate could help IBM take ownership of these verticals.
By acquiring Initiate as a defensive move, IBM will eliminate the risk of another vendor (EMC, HP, Microsoft, SAP) from strengthening or entering the MDM market as a tough competitor.
While I wouldn’t expect IBM to validate my 2nd assumption, they did in their announcement validate my first. In their announcements, they stated “IBM has announced plans to acquire Initiate Systems, a market leader in data integrity solutions for information shared among Healthcare and Government organizations”.
A couple of weeks ago IBM announced its 4th Quarter and Full-Year 2009 results. Their Growth Markets Business Unit which includes 140 of the 170 countries that IBM operates in – grew 14% in Q4 compared to 3% decreases in the Americas. For the quarter, Growth Markets represented 20% of IBM’s revenue. For the year, Growth Markets were 19%, up just slightly from 18% of total IBM revenue in 2008. The signs are clear: Growth Markets are growing, even as other markets fell. Much of the success in Growth Markets has come from “Smarter Planet” solutions which are gaining traction among governments, utilities and private sectors.
NOTE: IBM’s growth markets are those that show increased potential for them. They do not equate to emerging markets according to the financial world’s and economic discipline’s definition. But, there is much overlap.