Trying to figure out a company's acquisition strategy is often complex. Some companies have very purposeful approaches to scoping out companies, products, and market segments, while others' approaches are much more scattershot.
Acquisitions of open-source companies have been a big topic of conversation ever since Red Hat acquired JBoss in April 2006. Many of us in the software industry thought that one or two large companies would snap up and consolidate several open-source companies in attempt to offer a complete open-source stack. But an open-source consolidator has yet to materialize.
In recent conversations with a number of open-source executives, it's come to light that many potential acquirers are less attracted to open-source companies that require more investment before generating revenue.
Considering that there are few private open-source companies generating beyond $15 million in annual revenue, an acquisition of an open-source company could certainly be tough for a public company to explain to Wall Street.
While a focus on the bottom line makes sense, product investment comes from many angles, not the least of which are users and developers, key drivers in VMware's acquisition of SpringSource.
If you follow the way Oracle and IBM acquire others, you see them expand portfolios--sometimes to the point where they own several similar product offerings. But from a competitive perspective, this is not necessarily a bad thing.
IBM already offered BPM, or business process management, products but acquired Lombardi to gather the revenue streams under their umbrella. Oracle, on the other hand, offered a whole suite of middleware before it acquired BEA Software but did so to achieve the economy of scale and single-source purchasing power that buyers seem to want. Oracle also acquired and immediately shut down Virtual Iron to get the product out of the market.
They may not be pretty, but these are smart tactics. … Read more
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