- IBM scooped up three more companies in the past three months, with Confluent the most recent
- IBM historically has had mixed success with acquisitions, but has pursued a clearer vision in recent years
- A lot rides on whether the company can effectively fold in its new assets into a cohesive platform
When IBM networking executive Andrew Coward left the company earlier this year, there was an open question around whether or not the company would maintain its buy rather than build strategy. But it seems Newton’s First Law of Motion has prevailed after all.
In the months since Coward’s departure in July, IBM has scooped up three more companies: Cognitus, to boost its SAP capabilities; Txture, to strengthen its hybrid cloud migration and modernization muscle; and Confluent, to help it build a data management platform geared toward feeding the AI beast.
The question now is not whether IBM will continue its buy rather than build strategy, but whether that approach is actually working.
“IBM has had a checkered history with acquisitions over the years,” HyperFRAME Research CEO Steven Dickens told Fierce. He pointed to its deals to buy Lotus in 1995 (which it sold to HCL in 2018) and SoftLayer in 2013 as examples of its varying degrees of success.
Matt Kimball, VP and Principal Analyst at Moor Insights and Strategy, noted some deals are made solely to capture IP, eliminate a competitor or tap new markets. That’s important to remember if a deal doesn’t seem to make sense at first glance, he said.
But as Dickens explained, IBM’s deals in recent years under CEO Arvind Krishna have had a much more clear throughline.
“The company has bought well over the last 5-6 years,” Dickens said. On top of that, “legacy software assets (Lotus Notes, BigFix, and its security portfolio) have been divested, the boat anchor that was the company's GTS division was jettisoned, and it has since blossomed as Kyndryl. The company is lean for the first time in 30 years, the strategy is clear and consistent: hybrid cloud and AI.”
All about execution
Case in point: IBM’s success with Red Hat, which it acquired in 2019. Red Hat’s technology now serves as the underpinning of IBM’s hybrid cloud and AI strategy, Dickens said. Recent deals like its purchases of Apptio and Hashicorp have helped round out IBM’s stack.
Moor Insights and Strategy VP and Principal Analyst Robert Kramer told Fierce its latest play for Confluent could flesh things out further with critical data platform capabilities.
“Confluent could be seen as the missing piece that brings data processing into the center of IBM’s architecture discussion,” he told Fierce.
The Txture and Cognitus deals make sense as well, he said. But folding in new assets isn't exactly a straightforward task, and a lot is riding on whether or not IBM can execute.
“There is still a question of whether IBM can turn all of this into a unified platform,” Kramer concluded. Integrating Confluent, Txture and Cognitus’ capabilities into the IBM platform will take time. And all the while there will be “competitive pressure from Microsoft, Google Cloud, AWS, Oracle Cloud, Snowflake, Databricks, Cloudera, and Teradata as they continue to evolve their AI focused data architectures.”