IBM Acquisition Targets Microsoft's Small Business Server

IBM is acquiring Net Integration Technologies, a Toronto-based developer of Linux-based business server packages that compete head-to-head with Microsoft's Small Business Server. Net Integration will become part of IBM's Lotus Software operation in what Lotus general manager Michael Rhodin described as a bid to refocus Lotus on the SMB market.

IBM did not disclose financial details of the acquisition of the privately held Net Integration. IBM expects to complete the deal later this quarter pending regulatory approval from the Canadian government.

Net Integration's Nitix line of self-managing business servers combines e-mail, file management, directory services, backup and recovery, office productivity software and other tools in a single bundle that runs on Linux. The e-mail capabilities are based on the Lotus Domino server that Net Integration resells under an OEM license.

"Net Integration has built some incredible technology that we really think is going to help us move into the small and medium-size business market," Rhodin said in a conference call.

Small businesses were traditionally a big part of Lotus' target customers, Rhodin said. IBM acquired Lotus in 1995 for more than $3.5 billion and the company focused on selling Lotus products to large customers. "Somewhere along the line we lost touch with our roots," the general manager said. He described the Net Integration acquisition as part of IBM's broader effort to restructure its sales operations and channel programs to regain momentum in SMB markets.

Net Integration products are sold exclusively through solution providers and the company has some 2,600 channel partners, said Ozzy Papic, the company's president and CEO. Lotus will build solutions around the Net Integration packages "that we believe will be very favorably received by the channel," Rhodin said.