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Is the mystery Borland suitor Serena?
Borland software is considering an offer from another company after a preliminary deal with MicroFocus. Is Serena the new company?
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Windows 7 - An eBayer's dream product?
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Know thine cloud provider
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SOA, ALM Dominate M&A


By David Rubinstein
January 1, 2007 — 
So long, Mercury. Hello, HP. Such was the result of the most notable acquisition in the software development market in 2006.

Back in July, Hewlett-Packard announced it would purchase the testing and quality assurance tools behemoth for US$4.5 billion in cash. Yet, given HP’s checkered record with making software acquisitions work (see Bluestone et al.), observers almost immediately began to question the deal, and competitors offered sweet incentives to Mercury customers to switch to their testing tools.

HP tried to reassure the market that Mercury’s tools would be built into product centers that address various needs, but then it went and said it was dropping the Mercury brand, sending chills through the already nervous Mercury user base.

On the positive side for HP, the acquisition again makes the company a serious player in the software tools market—OpenView notwithstanding—and positions it to compete with IBM in the SOA space. That’s because before Mercury was bought by HP, Mercury acquired Systinet, which makes software for IT governance and asset management, for US$105 million.

Another IT governance company was snatched up this year, when BEA picked up repository software maker Flashline back in August. Interestingly, BEA also was a licensee of Systinet’s software, but in September, BEA clarified that the Flashline repository, which the company said is better at asset management, would be baked into the company’s AquaLogic 360 SOA solution.

Linux distributor Red Hat also made a SOA play this year, as it acquired open-source application server provider JBoss for US$350 million in April. JBoss has added a distributed transactions system and an enterprise service bus to Red Hat’s lineup as the company seeks to deliver on an end-to-end SOA infrastructure.

Meanwhile, the next most notable sale in the software development market last year is one that didn’t happen.

In November, venerable tools company Borland decided not to sell its IDEs, after stating in February that it would sell them. It appears that after months of talks and evaluations, Borland decided that its best course of action would be to spin out its so-called Developer Tools Group into a wholly owned subsidiary called CodeGear. This way, the company—which always said the tools were integral to its broader solutions into application life-cycle management—could control the direction and feature sets of such products as JBuilder, Delphi, C++ Builder and the other IDEs.

A quick history, for those of you who have not been able to read SD Times’ coverage of this saga: In July 2005, after poor financial reports, CEO Dale Fuller left the company, and a former board member and significant shareholder, Robert Coates, said the company should spin off the tools and commit to ALM. Later that year, the company rebuffed an offer by Coates, saying the tools “are not for sale.” But in February 2006, with Tod Nielsen now CEO, the developer tools went on the market with the promise of a sale announcement by the end of September. That date came and went, and then Borland announced the decision to spin off the subsidiary. With Eclipse now the foundation of JBuilder, the company has an opportunity to grow CodeGear. The new company’s execution will be critical to survival.

In between, Borland acquired Segue Software for its testing tools, and Gauntlet for its defect prevention capabilities, rounding out its offerings in the ALM market, where it looks to compete in a crowded field.

Also strengthening its ALM story this year was Compuware, which announced in April it would purchase Dublin, Ireland-based SteelTrace for US$20 million in cash. SteelTrace brings requirements management onto Compuware’s plate. Since the two companies already had partnered, and their products were already deeply integrated, new product rollouts should go smoothly.

The ALM space saw further consolidation last year when Telelogic extended its position into the embedded systems market with the March acquisition of design software provider I-Logix.

Other notable acquisitions in 2006 included Attachmate’s US$495 million pickup of NetIQ, CA’s scooping up of Wily for US$375 million, BMC Software’s purchasing Identity Software for US$150 million, and IBM’s US$2 billion worth of purchases, including companies called Webify, MRO Software and FileNet.

David Rubinstein is editor-in-chief of SD Times.


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