Editorials
By SD Times News Team
August 15, 2006 —
(Page 1 of 2)
Hewlett-Packard’s purchase of Mercury Interactive may make good financial sense, and certainly helps HP better position its OpenView IT management business to compete against CA’s UniCenter and IBM’s Tivoli. However, given HP’s size and focus on general IT, it does not bode well for software development and test/QA managers who rely upon Mercury’s tools.
Mercury is a powerhouse in software performance management and testing. In the 2005 Testers Choice awards, a reader poll conducted by SD Times’ sibling publication, Software Test & Performance, Mercury swept seven out of 14 categories with LoadRunner, TestDirector for Quality Center and QuickTest Professional.
When one company dominates software testing and performance management as thoroughly as Mercury, the prospect that the company will be subsumed into a behemoth with a US$2.85 billion market cap and $986 million in annual revenue is daunting—and frightening.
The most comparable acquisition in our space, that of Rational by IBM in early 2003, differed in that IBM was already a major player in software development. By contrast, while HP has a stellar reputation in IT management with OpenView, it’s only peripherally been involved in software development and testing—and its previous experiences were lackluster at best.
The Mercury deal is also much bigger than the Rational purchase: HP is paying $4.5 billion, nearly twice what IBM shelled out. The ripple effect that this purchase will have on the test market will likewise be huge.
Consider: Many Mercury test/QA customers may not want to become HP customers, especially if they don’t use HP hardware, or if they prefer competing management platforms like Tivoli or UniCenter or Microsoft Operations Manager. Expect other test/performance companies to launch aggressive moves to migrate Mercury customers. While the lion’s share might end up with the other giant, IBM Rational, there’s a lot of room for players like Compuware, Empirix, Parasoft, Quest or Borland to pick up market share.
Also, the long-term fate of the Mercury test/performance products is unknown. Will HP aggressively invest in this new line of business? Will they sell the products off? Or will they be neglected and slowly die, just like Bluestone Software’s middleware did after being purchased by HP in late 2000? This speculation may fuel additional acquisitions and investment in the test/performance space, as well as uncertainty.
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