It's certainly been a big year for mergers and acquisitions. And, even though we're approaching the holidays, deals are still getting done.
Look at IBM
Micromuse produces network management software called Netcool, which can do things such as monitor activity and detect problems within the network. Big companies -- such as Fidelity Investments -- that have huge communications needs are finding it more attractive to develop their own networks and bypass the traditional communications providers. The new technologies -- such as voice over Internet protocol and IPTV -- do make it important that the solutions are strong as well.
For IBM, it appears that its customers are demanding these solutions, so it has partnered with Micromuse for the last few years because of this. Now, it appears that IBM thinks more and more customers will want these solutions. Traditionally, Micromuse's products were mostly for telecom companies. But as companies deploy their own communications networks, the need for network management software has been growing.
Micromuse has about 1,800 customers. And many are large enterprises, such as Verizon
However, for small enterprise software companies like Micromuse, it is becoming increasingly difficult to compete against companies like Computer Associates
In other words, expect much more consolidation in the enterprise software world. Some of the big players, like Oracle
As for IBM, its acquisitions have been smaller, focused companies (the company has struck about a deal per month this year). After all, IBM does not need to buy distribution. Rather, it is using acquisitions to fill gaps in its product line -- making its overall offering more profitable while mitigating the risk of making a bad deal.
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Fool contributor Tom Taulli does not own shares mentioned in this article.
