Yesterday IBM (NYSE: IBM) announced
it is acquiring DataMirror Corporation
(TSX: DMC) based in
Obviously it is too early for IBM to release a product roadmap, but we have already run into a little disagreement between analysts and IBM on whether there is product overlap and how much DataMirror will be integrated into the IBM Information Server.
In fact, different IBM people don't even seem to agree on these subjects when they're talking to the press. An excellent blog that addresses this in more detail (or more bluntly) is Vincent McBurney's (a Solution Architect for IBM's products) "DataMirror on the Wall who is the prettiest Information Server of all."
Before getting too deep, I'd like to add that of course there is product overlap! IBM's Information Server provides CDC and real-time access, as does DataMirror. Maybe DataMirror's capability is better or maybe not (of course why would IBM buy it if it is not.)
Or maybe as Andy Hayler, noted industry expert and founder of Kalido stated in his post "Mirror, mirror on the wall, who is most blue of them all?" "For IBM the acquisition adds some solid technology to its data warehouse offering and its 'on demand' strategy, in this case replacing Powerpoint promises with something that actually works." Ouch, that hurts (but agrees with Vincent's assessment.
Now let's separate the forest from the trees. IBM's Information Server rates at the top of analysts' data integration ratings, so it is best-in-class and IBM is only purchasing DataMirror to enhance it even more. That's a great positive to customers (and stockholders too.) The broader issue is that this is another example of what one of IBM's competitors calls a "tuck-in" acquisition strategy.
The software Microsoft, Oracle, IBM and SAP, along with neo-titans such as Business Objects and Cognos (until they are bought by the titans, another post another day…) have been using the "tuck-in" acquisition strategy to gather product functionality to incorporate into their product suites. The titans and neo-titans have built out product suites for business intelligence (BI) or integration capabilities through organic (internally) development and through acquisition. These suites (or platforms) keep expanding to be more and more comprehensive and robust. These suites are very particularly appealing to large customers with "heavyweight" data integration or business intelligence challenges. And the suites give the titans the edge when it comes to analysts' ratings and software evaluation bake-offs.
However, for all those customers seeing the glass half full, there are potentially other customers (or prospects) that would see it as half empty. What could possibly be negative about this approach? Some would argue there is no free lunch and that with that functionality come complexity and cost.
The very reason that many smaller software firms, such as DataMirror, are successful in selling their products is that their products are "lightweight" in comparison to the titans' software suites. You might infer lightweight to be a bad thing, but its interpretation is in the eye of the beholder (or purchaser.) For large enterprises dealing with heavyweight, or very complex and large applications, then lightweight is a negative, i.e. not as much functionality or scalability. The heavyweight application users prefer the software suites or platforms so they can get everything they need in one place.
Lightweight application users include the SMB (small to medium business) market and many applications within large enterprises (this may be a surprise to many software marketers!) These folks often prefer the more lightweight applications meaning a smaller, i.e. more targeted, software footprint and capability. Why pay for, implement infrastructure for, train for and have people with expertise in a software suite when you only need a small portion of its capability? The heavyweight users want the best and most full-featured tools, while the lightweight users want the tools to match what they need. Data Mirror didn't get 2,200 users because their product was as capable as a heavyweight software suite, but rather because it wasn't.
As the software titans and neo-titans continue to acquire smaller firms for tuck-in capabilities you have got to wonder if that means there is a whole market that is being "sent-out" to look for other vendors and products? Is this the opening for new and innovative software firms to enter the market (and then feed the titans when they become acquired?) Is this the opening for open source software in the business intelligence, integration and business application markets?