Economically, we still haven’t left the Great Recession behind. It’s everywhere; in every enterprise balance sheet, in every merger and acquisition, in R&D departments on both sides of the Atlantic. That said, it hasn’t really dampened enthusiasm for buy-outs and there were many this year across the entire IT spectrum.
While there haven’t been a huge number of breath-taking deals, like Microsoft’s acquisition of Skype for US$ 8.5 billion, or the Oracle acquisition of Sun for US $7.4 billion that closed at the beginning of 2010, there has still been a lot of activity in all sectors as larger companies look to buy missing technologies, rather than develop the technologies themselves.
The pace of market-change is such that by the time a company has put the money and time into developing a new product, it has already been left behind by others that have bought what they need and moved on.
The merits, or demerits, of this kind of strategy are debatable. It would be quite easy to make a case that this kind of activity stifles innovation, but it would also be possible to argue that it drives the market forward.
A bigger problem for many companies is integrating new technologies into existing technology portfolios, or even worse, developing a strategy for the acquisition that fits the buyer’s world view.
And next year, it’s likely to continue like this. Most companies have renounced big acquisitions for the moment; Larry Ellison said even two years ago that they would be cutting back on the size, if not the amount Oracle would be paying for companies, and, relatively speaking, IBM has only really bought financial minnows this year, even if they are strategically very important for Big Blue.
Out of all the acquisition activity over the year, here are a few that really stood out for us. This is, of course, a personal view, so feel free to suggest your own favorites from the year gone by and we can look at compiling a second review from that. Here they are in chronological order, as it is just about impossible to rank their importance
1. HP, Autonomy
Needless to say, the starting point here has to be the HP acquisition of Autonomy for US$ 10. 4 billion. Agreed that this is not strictly speaking an acquisition for 2012 as the papers were signed in August 2011, but it has only emerged in recent months that there may have been some creative accounting going on at Autonomy. The result is that HP has written down US$ 5.8 billion with at least one investor stating its intention to sue HP for wasting money.
While HP’s fortunes are now considerably worse than they were two years ago, there are signs that the race to the bottom has finally run its course. HP under Meg Whitman is hoping to put all this behind and build on the IDOL technology even if it looks like the legal cases around this could go on for years.
2. IBM, Green Hat
However, let’s begin at the beginning. While the slow-down in economic activity had been well flagged by the end of 2011, IBM said it was pushing ahead with its acquisition plans that are being fed by a war-chest of US$20 billion.
Big Blue had also announced the appointment a new CEO in the latter half of 2011 in the shape of Virginia Rometty, who didn’t lose any time in explaining to the IBM board and the markets that the acquisition drive was to continue and that 2012 would see more of the activity we had seen in 2011.
Rometty used the acquisition of UK-based Green Hat at the beginning of January to announce that she would carry on as Sam Palmisano her predecessor had and would focus on technologies that would add to their existing portfolio.
Green Hat provides products that enable developers to test applications in the cloud. Like everything cloud-based, the attraction here is the provision of testing capabilities that are considerably cheaper than conventional testing methods as the cloud can effectively incorporate testing hardware and software testing without having to create real-life labs.
But it also pointed to IBM’s continued efforts to develop its cloud capabilities and technologies with some interesting developments in that space throughout the year, the most recent of which was the release of SmartCloud Docs.
3. SDL, Alterian
Also in February this year, Managing Editor Barb Mosher managed to tease out the details of the SDL acquisition of web engagement management vendor Alterian, even if details around the deal were scarce at the time it was announced.
With the acquisition of Alterian, SDL has added two new divisions to its fold: Social Media Intelligence, Campaign Management & Analytics. This is on top of its Web Content Management, Language Services, Language Technologies and Structured Content Technologies divisions.
As for Alterian Content Manager, the product and its team have been rolled together in the Web Content Management Division to exist with SDL's WCM: Tridion.
We also found out that there is still room to haggle in the IT space. While, they didn’t say how much SDL originally offered for Alterian it seems Alterian turned down the first acquisition offer forcing SDL to come up with US$ 110 million.
4. Gartner and Business Intelligence
On the acquisition front, Gartner also had much to say about the business intelligence space. According to the Magic Quardrant for Business Intelligence enterprise demands for different kinds of business intelligence is forcing vendors to come up with software that will keep business users happy.
The BI market, Gartner says, is a mature market that is expanding at a rapid rate. The result is a high level of innovation across the market, coupled with significant and widespread acquisitions over the past five years.
Notable among those acquisitions is the Oracle buy-out of Siebel and Hyperion, SAP and Business Objects, and the IBM purchase of Cognos. In all cases, assets and technologies were incorporated into the relevant technology portfolios.
5. SAP, Ariba
But back to the acquisitions themselves. In May, Oracle, SAP and IBM were headed on a collision course in the data management space, but then what’s new in that?
Well, what was new was that SAP announced that it had put a bid of US$ 4.3 billion for Ariba, a vendor of cloud-based collaboration e-commerce applications, a bid that was finalized and accepted at the beginning of October.
The acquisition is still only recent so it’s not clear how it will fit into the SAP stable, but there are already signs that it is using it to expand its business base as much as its technology base.
6. Salesforce, Buddy Media
Salesforce.com was also active in the acquisition space, but these were to be acquisitions with a very set and definite purpose, and which were to appear in an integrated form later in the year.
Over spring and into the early summer there had been rumors that Salesforce was trying to buy social media marketing vendor Buddy Media. In June, It became fact. Salesforce picked up Buddy Media for US$ 689 million in cash and equity broken down as -- US$ 467 million in cash, US$ 184 million in common stock and US$ 38 million in options and restricted stock.
This fell in nicely with the Radian6 buy only a year earlier for US $326 million. The plan was to integrate the service into Salesforce products Chatter, Service Cloud, Sales Cloud and Force.com.
And that’s exactly what Salesforce did. In September of this year, at Dreamforce, Salesforce unveiled its Marketing Cloud. According to Salesforce, it is the first time a single suite provides everything needed for complete customer experience management.
7. Facebook, Instagram
Facebook was also busy snapping up photo app vendor Instagram. All the photos from Instagram also became the property of Facebook following the US$ 1 billion deal.
Instagram had started life as a touch-up and share service, became a social network in its own right, which clearly didn’t suit Mark Zuckerberg, who made the announcement on his own Facebook page. Of the deal, he said:
… we're committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.
We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience. We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook."
Again, it’s still too early to see where Facebook is going to take this, but we’ll be following as it develops.
8. Microsoft, Yammer
Another one of the major deals this year that came with a pretty nice price was the acquisition of Yammer by Microsoft for U US$ 1.2 billion in cash. It’s not quite the US$ 8.5 billion that it paid for Skype, but it’s still substantial.
In the announcement around the deal, both companies said that they would be putting Yammer into the Office Division, and that Yammer would still be run by David Sacks, Yammer CEO. Yammer will continue to develop standalone applications, but will also be integrated with the likes of SharePoint, Office, Skype and MS Dynamics CRM.
While there was huge interest in the deal, opinions appeared to be divided as to how it was going to work out. David Sacks of Yammer thought it was pretty darned good, while a lot of other people in many different interested companies remained unconvinced.
Oracle was also busy in the social space and announced finally in July that it closed the deal to buy Vitrue. This was another deal that was to produce results very quickly.
In fact at OpenWorld, CEO Larry Ellison finally revealed what he was doing with all the acquisitions in the social media space, Virtue, RightNow, Fatwire, Collective Intellect and all the rest. He pulled them all together and released Oracle's Social Relationship Management Suite.
Terms of the Vitrue deal were not been released -- much like the recent Involver acquisition -- and not a lot has changed since the deal was first announced in May, certainly not for Oracle. But it doesn’t really matter now -- Oracle has a social relationship management suite and it’s unlikely that that’s the end of it.
These were just some of the top deals for us from either a business, or technology perspective. Did we miss anything? What was your favorite deal of 2012?