Tuesday, July 28, 2009

IBM acquisition strategy

By now you've seen the reports on IBM's intention to acquire SPSS for $1.2 billion - a move that will bolster our business analytics portfolio. Today IBM also acquired privately-held Ounce Labs, a small company headquartered in Waltham, Mass.

While the news of IBM's Ounce Lab acquisition is dwarfed by the public visibility of SPSS, the Ounce Lab acquisition sheds light on an interesting trend.

IBM acquisitions are a key part of IBM's growth strategy. In fact, IBM is increasingly relying on software as an engine for growth. IBM derives 43% of its profit from its Software Group, with revenues reaching $22.1 billion in 2008.

What's unique about today's Ounce Labs acquisition is that it is a result of IBM's strong relationships with the global venture capital community. Ounce Labs was introduced to IBM through its ongoing relationship with leading Silicon Valley and Boston-based VC firm Greylock Partners.

One third of IBM's acquisitions are driven by IBM's Venture Capital Group. As a result of partnering with leading venture capitalist firms, IBM is able to foster new partnerships and help to drive innovation in the marketplace. For the VC investing in the startup, it means a profitable exit. For IBM, it often means access to emerging technologies and business models to complement its software portfolio for partners and clients around the world.

These start-up companies provide a fresh perspective and reinforce the company's strategy of focusing on high-value, high-growth segments of the IT industry.

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