HP To Buy Opsware For $1.6 Billion

Hewlett-Packard Monday said it will acquire Opsware Inc., a developer of data center automation software, for approximately $1.6 billion, in a move intended to strengthen its position against rivals IBM and Computer Associates in the systems management tools market.

HP also announced that Opsware CEO Ben Horowitz will lead HP's Business Technology Optimization organization of which Opsware will become a part. The acquisition is subject to shareholder and regulatory approval. HP expects to close the deal by the end of its fiscal year in October.

The Opsware buyout is the latest of several big-ticket acquisitions HP has made in the systems management space, including last year's $4.5 billion buyout of Mercury Interactive and the $425 million acquisition of Peregrine Systems in 2005. Those companies, along with HP's original OpenView systems management software, make up the core of the BTO offerings.

Horowitz, in a conference call, said Opsware's suite of products is designed to automate the management of today's increasingly complex corporate data centers, including rapidly expanding server farms and storage systems and the growing number and diversity of devices attached to corporate networks. The Opsware toolset is used to provision servers, networks and storage devices, and then manage ongoing changes and compliance requirements around those systems.

Thomas Hogan, senior VP of HP's software business, of which BTO is a part, indicated that most or all of Opsware's 550 employees would be joining HP. "We think we just added 550 world-class people to our team, to our mission, going forward," he said. Sunnyvale, Calif.-based Opsware had sales of $101.7 million in its most recently completed fiscal year.

HP and Opsware sell most of their systems management products direct to corporate customers, although both use some channel partners. Hogan said both companies count Cisco Systems as a reseller partner, for example. Opsware's sales are largely within the U.S. and Hogan said HP has the opportunity to expand those sales globally.

Hogan said many HP and Opsware products are already working together at customer sites, "so a lot of this has already been integrated from a field perspective." But he said HP would take additional steps to integrate the two companies products.

HP also announced that it is acquiring Neoware Inc., a developer of thin-client computing and virtualization technology, for $214 million.

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