IBM, HP, and the webMethods Takeover Bid

Who will spoil the webMethods takeover bid? IBM or HP? That's the multi-million-dollar question hovering over the competitive SOA software market.
Acquisitions are fun. Something about a company shelling out millions or billions of bucks to shake the trees of capitalism makes us sit up and take notice. Our blood hums when cash is exchanged.

What's even more fun is when a company bids for another vendor, only to have it opposed by another competitor in the space.

We saw one bidding war last year; Symphony had an agreement in place to buy content management provider Hummingbird, only to be outbid by Open Text. Good times.

So it was with great amusement that I read in the Wall Street Journal yesterday that IBM (Quote) or HP (Quote) might throw a big fat wrench into Software AG's bid to buy integration software maker webMethods (Quote).

Here's the rub: Software AG offered to buy webMethods for $546 million in cash in a takeover bid that will help the German integration software vendor double its customer accounts in North America.

The offer came after webMethods CEO David Mitchell said on a conference call yesterday webMethods drew "significant strategic interest."

This is an aggressive play versus IBM, and even HP, which see themselves as leaders in the market for service-oriented architecture (SOA) software.

SOA is a methodology for creating distributed computing software that helps companies integrate applications to better meld business processes with IT. IBM, HP and others in the market position use SOA (define) as a salve to help overwrought IT admin get a grip on their spaghetti tangle of disparate applications.

IBM and HP make SOA software that competes with Software AG and webMethods products. IBM is even preparing its first SOA customer event in Orlando, Fla., next month to demonstrate the headway its products and global services have made.

I asked an IBM spokesperson if he would comment on whether IBM had designs on webMethods to block Software AG. IBM's perennial policy is to avoid comment on acquisitions; alas my attempts at seeking the truth about the Journal rumor were rebuffed this time, too.

HP was more helpful with my inquiry. David Butler, chief SOA evangelist for HP, provided some perspectives about the market in a phone call later Thursday.

If there is anyone qualified to talk SOA, it's Butler, who joined HP through its Mercury Interactive purchase , and before that through Mercury's Systinet buy.

But Butler sees HP's software, which he said provides governance, quality and management for companies adopting SOA, as complementary to the Crossvision composite application suite from Software AG and the Fabric 7 integration platform from webMethods.

Essentially, Butler explained, HP's SOA products would be called in to govern or manage Software AG's and webMethods' platforms.

"From my perspective, this is a natural evolution; there are execution platforms and integration platforms, and all of them need SOA governance, quality and management, so this is potentially neutral to good news for us in that we'll continue providing our solution for customers using that platform," Butler told internetnews.com.

But when it came down to the multi-million-dollar question about whether HP would try to block Software AG's bid for webMethods, he clammed up as fast as you can say counter offer.

Butler would not confirm or deny that HP was going to counter Software AG's bid for webMethods. In fact, he didn't answer my question at all because the HP public relations spokesman jumped in before he could.

"I think you've gotten some good comments from David here and I think he's pretty much summarized our perspective from HP software so I think that's where we'll choose to end it," the spokesperson said.

I asked the spokesman if that's a no comment. He said "I didn't say that."

This, ladies and gentleman, is the proverbial door slammed in the face after some casual market perspective. When it came to the question, I got shot down. But what the heck? It was fun trying.

What can we make of HP's evasion of the question? Suspicious minds and conspiracy theorists may think something is afoot. It's possible Butler and HP officials were just not prepared to answer the question until they spoke to CEO Mark Hurd.

But I don't think it's going to happen. I believe IBM is confident enough in its SOA products, services and overall execution. And I believe HP still has some work to do in rationalizing the Mercury Interactive and Systinet assets that form the foundation of its SOA portfolio.

The company demonstrated that it rapidly integrated the portfolio late last year, but you're never really done integrating a company of that size for a few years. Things always pop up.

HP has demonstrated an Oracle-like propensity toward acquisitions, yes, but I'd be surprised if it chose to tussle with Software AG over webMethods. Though it could give HP some leverage against East Coast nemesis IBM. Hmm. Can I take a mulligan on predicting how this one will shake out?

This article was first published on InternetNews.com. To read the full article, click here.






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