HCL to acquire select IBM software products for $1.8b
IBM is going to sell its software product including Lotus Notes and Domino products and portals to HCL technologies for an amount of $1.8b The Indian giant has claimed that it is picking up products that are in large growing areas. The companies said in a release that the transaction should close mid-next year, subject to regulatory approvals.
IBM paid $3.5 billion for Lotus back in the day. The big pieces here are Lotus Notes, Domino and Portal. These were a big part of IBM’s enterprise business for a long time, but last year Big Blue began to pull away, selling the development part to HCL, while maintaining control of sales and marketing.
The products HCL has picked up include Notes and Domino, Connections, on-premises versions of Portal, Commerce, Unica, BigFix, and Appscan.
"The products that we are acquiring are in large growing market areas like security, marketing, and commerce, which are strategic segments for HCL," president and CEO of HCL Technologies C Vijayakumar said. "Many of these products are well regarded by clients and positioned in the top quadrant by industry analysts." Vijayakumar added the company sees "tremendous potential" for creating as-a-service offerings by combining the acquisitions with its existing products.
IBM senior vice president of cognitive solution and research John Kelly said HCL is a "strong strategic fit" for the products. "We believe the time is right to divest these select collaboration, marketing, and commerce software assets, which are increasingly delivered as stand-alone products," Kelly said. "We believe that HCL is well positioned to drive innovation and growth for their customers."
Alan Lepofsky, an analyst at Constellation Research who keeps close watch on the enterprise collaboration space, says the sale could represent a fresh start for software that IBM hasn’t really been paying close attention to for some time. “HCL is far more interested in Notes/Domino than IBM has been for a decade.While this software may feel long in the tooth, Notes and Domino are still in use in many corners of the enterprise, and this is especially true in EMEA (Europe, Middle East and Africa) and AP (Asia Pacific)," Lepofsky said.
IBM and HCL have entered into an ongoing intellectual property partnership for five of the products. The companies said the products have a total addressable market of $50 billion.
In October 2017, the pair entered into an arrangement that saw HCL become responsible for the development of Domino products.
In its third-quarter results released in October, IBM reported revenue of $18.8 billion, down 2 percent from a year ago, and net income of $2.7 billion, down 1 percent.
Big Blue's cognitive solutions, technology services, and cloud platform units saw year-on-year decline.
At the end of October, IBM purchased Red Hat for $34 billion,which was the biggest software acquisition ever and was about positioning IBM as a cloud power.
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