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Wed 2 Aug 2006 04:00 AM

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IBM adds US$1.3bn ISS to its software portfolio

Network security firm is the latest Big Blue big buy

IBM’s summer software spending spree has continued with the purchase of network security firm Internet Security Systems (ISS) for around US$1.3 billion.

The deal is the fourth buy Big Blue has made in under a month following the acquisition of content management software maker FileNet, asset management software provider MRO Softwa- re and privately held SOA vendor Webify Solutions, and brings its total spend in August to more than US$3.64 billion.

The acquisition of ISS, which specialises in network protection products and services, is a further sign of the importance IBM is placing on its software division — the only one of Big Blue’s business units to deliver sales growth during its second quarter. CEO Sam Palmisano has spearheaded this software drive, buying 32 firms in just three years.

IBM’s closest competitor in the software race, storage giant EMC, has acquired 24 companies during the same period.

EMC made its own foray into the security market in July with the purchase of RSA Security for US$2.1 billion.

The ISS deal will give IBM a strong foothold in the estimated US$22 billion security services sector, with the network security firm’s clients including 17 of the world’s largest banks and 15 of the largest governments.

It will also give IBM ISS’s X-Force security intelligence service, a widely respected research group that gives analysis of global online vulnerabilities and threat conditions.

ISS’s operations will be established as a separate business within IBM Global Services and its technology will be integrated with Tivoli’s IT service management portfolio, which includes software for identity management, SOA, access management, and security information management.

“This acquisition will help IBM to provide companies with access to trained experts and leading-edge processes and technology to evaluate and protect against threats and enforce security policies,” said Val Rahmani, general manager of infrastructure management services at IBM Global Services.

Analysts, however, have questioned how well-suited ISS’s network security products are to IBM’s market approach.

Research firm Gartner said that while the managed security services provider (MSSP) ele- ment that ISS brought to Big Blue made sense as it would bolster IBM’s own failing MSSP offering, acquiring the network security line seemed “less logical”.

“ISS’s products can help IBM create dedicated network devices that integrate diverse elements of the service-oriented architecture framework and software stack, a key focus since the acquisition of DataPower,” Gartner wrote in a recent online advisory.

“However, this goal runs counter to success in selling high-speed inline network security products to the network security buying centre, which represents the majority of ISS’s installed base and brand value,” the firm stated.

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