The Most Significant Acquisitions Of 2011 (So Far)
Technology Acquisitions Abound
There have been plenty of mergers and acquisitions in the first six months of 2011 as consolidation in a number of key markets speeds up and interested in areas like cloud computing continue to swell. Here's a look at 10 of the most significant deals of the year so far.
Microsoft Snags Skype
At first glance, it may be hard to believe that Microsoft's biggest acquisition in its long, distinguished history wasn't a rival software maker or maybe a big hardware manufacturer but instead a VoIP service.
Nevertheless, Microsoft paid $8.5 billion in cash for Skype in May and is currently hard at work integrating the VoIP company into its software stack. Skype boasts 170 million users, but most of them using the standard free VoIP service, so Microsoft will also have to find a way to recoup the sizeable investment. The software giant expects the deal to close sometime later this year; the deal recently received approval from the U.S. Department of Justice.
Verizon Buys Terremark
Verizon kicked off 2011 with a big move to bolster its cloud computing strategy: a $1.4 billion acquisition of Terremark Worldwide, a rising star in the cloud computing and Infrastructure-as-a-service fields.
Terremark, which had been one of the best performing cloud providers stocks recently, became a wholly-owned subsidiary of Verizon and gave the telecom giant the muscle it needs to execute its ambitious cloud computing strategy, which includes an "Everything-as-a-Service" approach. But perhaps just as importantly, the deal kicked off a trend of cloud computing acquisitions this year and now looks to change the traditional telecom business model.
CenturyLink Scoops Up Savvis
After Verizon bought Terremark, CenturyLink upped the ante and made the bold move to acquire cloud and hosting provider Savvis in April. The telecom service provider paid $2.5 billion in cash and stock for Savvis. In addition, CenturyLink agreed to assume or refinance Savvis' debt -- all $700 million of it -- which brought the total for the acquisition to $3.2 billion. The acquisition was completed last week after receiving the required regulatory approval.
It's an expensive deal, but the addition of Savvis gives CenturyLink, traditionally a telephone and Internet service provider, a major presence in the cloud and hosting services market. Like Verizon's purchase of Terremark, the Savvis deal could be a sign of things to come as the telecom market continues to consolidate while interest grows around cloud services.
Polycom Pays For HP's Video Biz
While the dollar amount for this deal isn't high -- only $89 million, a paltry sum compared to the previous two blockbusters -- the effect of Polycom's acquisition of HP's Visual Collaboration business looks to be significant.
First, Polycom gets a boost to its already-strong videoconferencing business with the addition of HP's video and telepresence products. Second, as part of the deal the two companies agreed to significantly expand their strategic alliance; Polycom is now HP's exclusive reseller for those telepresence and video products, as well as some video-based unified communications solutions. Meanwhile, Polycom will make its video applications available for HP's WebOS platform. Given that Polycom is Cisco's chief competition in the enterprise telepresence and videoconferencing market, the marriage between HP and Polycom makes perfect sense.
Dimension Data Opts For OpSource
Yet another cloud computing deal makes the list (see, we told you it was a trend), thanks to Dimension Data's acquisition of OpSource. The systems integration powerhouse paid an undisclosed amount for OpSource, which specializes in cloud services and managed hosting.
The deal is significant because Dimension Data, which is owned by Tokyo-based NTT, has sought to expand into cloud computing solutions. The integrator recently launched a Cloud Solutions Business Unit, which will tie in OpSource's platform and allow the solution provider to offer more robust cloud infrastructure to clients. Just as Verizon's purchase of Terremark looks to change the telecom model, the Dimension Data-OpSource deal could alter the solution provider model as VARs look to transition to cloud service providers.
Oracle Pays Up For Pillar Data Systems
Oracle continued its acquisition streak with an agreement to buy Pillar Data Systems, a storage company whose primary owner is none other than Oracle CEO Larry Ellison. Pillar Data specializes in SAN block storage systems, and its Axiom storage arrays are expected to give Oracle a much-needed storage component to its hardware-software stack. Oracle completed its acquisition of Sun Microsystems last year and since then has implemented of a strategy of selling complete data center solutions. The addition of Pillar Data now gives Oracle the ability to offer software, servers and storage systems for enterprise data centers and also makes Ellison's company a more formidable opponent for rival HP.
Citrix Snatches Cloud.com
We've already seen cloud acquisitions from telecom providers and system integrators, so now it's time for software companies to get into the mix. Citrix recently agreed to buy cloud infrastructure startup Cloud.com for an undisclosed amount.
The addition of Cloud.com gives Citrix, a leader in the desktop virtualization market, a major asset for its new Cloud Platforms Product Group. Specifically, Citrix will be able to build public and private clouds. Cloud.com is just the latest cloud-focused purchase for Citrix, which bought EMS-Cortex, Netviewer AG and VMlogix over the last 12 months.
CA Buys Base Technologies
CA has made a slew of cloud-focused acquisitions recently, perhaps more than any other software vendor in the IT industry. So it's hardly a surprise that CA made another cloud purchase with Base Technologies.
But the Base deal differs from, say, CA's purchase of Interactive TKO this year, because Base isn’t an ISV or a cloud service provider -- it's a solution provider, technically speaking. Base is a privately-held consulting firm that specializes in virtualization and cloud computing services. And better yet, Base is headquartered in McLean, Va., and is strong in the lucrative federal government and health care markets. Look for more vendors to make bids for cloud-focused solution providers.
AT&T Adds T-Mobile
While it's not as influential for the VAR channel, AT&T's bid for T-Mobile deserves to be on the list for a few reasons. First, it's the largest dollar amount at a whopping $39 billion. Second, it's another example of consolidation in the telecom provider industry, which has been making inroads with the channel. And third, the deal has big implications for the growing mobile device market, which has been booming with the introduction of smartphones and tablets.
Of course, this is assuming that the proposed merger gets the necessary regulatory approval from the government. And given the number of hurdles involved, not to mention the telecom industry's history in such matters, it could be a while before this proposed acquisition is resolved.
Nvidia Eyes Icera
While most of the deals on this list have been around cloud computing and services, here's a significant hardware deal that may have flown under the radar: Nvidia's $367 million purchase of Icera.
The deal is another example of how Nvidia, a graphics card powerhouse, is expanding outside of the GPU market as the processor industry moves toward more CPU-GPU integrated architectures. Icera specializes in baseband processors for mobile devices to connect to wireless networks. The wireless chip maker's modem technology (no, not those annoying dial-up modems from the AOL days) give smartphones and other mobile devices the ability to connect to high-speed 3G and 4G wireless networks. Just like Nvidia melded its GPU and CPU technology, we're guessing the company will integrate Icera's baseband processors into the mix sometime in the not-so-distant future.