RealTime IT News

IBM Finds Its Micromuse

UPDATED: IBM took a step toward building up its systems-management portfolio with the $865 million purchase of Micromuse Wednesday.

Micromuse's ability to add voice- and video-systems management capabilities made the company an attractive target, more so than the business partnership it has already shared with IBM since 1999.

The Micromuse flagship product is the Netcool suite of five product families. The company's Netcool/Proviso product collects and correlates network performance and provides reports on errors, traffic and capacity.

The product is used by carriers to deliver better quality of service to VPN , VoIP , triple play (video, voice and data) and other mixed-bag environments.

For Big Blue, the purchase extends the capabilities reach of its Tivoli line to compete more effectively against such manufacturers as Cisco Systems .

"If you look out there today in the marketplace, there's a convergence of data, video and voice happening with the service providers, while at the same time enterprises are looking to drive cost improvements with solutions like VoIP," Al Zollar, IBM Tivoli software general manager, said in a press conference Wednesday.

"Networks are no longer pipelines of data. Internet telephony [and] video-on-demand are not only changing the way people use information technology; they're changing how companies have to manage it."

The acquisition, expected to close in the first quarter of 2006, is subject to shareholder and regulatory approvals. The $865 million price tag is figured at $10 per share for investors.

When the deal is closed, Micromuse operations will be set up as a business unit, with the Tivoli software division reporting to Zollar. The San Francisco-based company's technology will be incorporated with Tivoli's hardware, services and software line.

VoIP is becoming an increasingly popular solution for companies that want to integrate their voice traffic and data traffic under one network. With VoIP, or IP-based PBX , network IT managers can consolidate two networks and get a better grip on managing voice and video operations.

A September report by research firm Infonetics shows carrier VoIP and IP PBX sales were up 55 percent in the second quarter of 2005, an 18 percent gain over the first quarter. The group predicts $5.7 billion revenues in the space in 2008.

Lloyd Carney, Micromuse chairman of the board and CEO, said converged networks are as much a "green field" as the telecommunications push back in the mid- to late-1990s, and expects to see as much opportunity.

Customers, more and more, are looking to buy their products from one vendor, he said, and if you can be the first to bring that to a company, you're going to win some deals. It's something Micromuse couldn't do on its own, he said.

"If winning is about market share, the best move for us, in order to garner the best market share, is to be part of a [unit] like Tivoli," Carney said.

Micromuse, and now by extension IBM, is well-positioned in that market.

Zollar said the Tivoli and Micromuse product lines are complementary and they expect to cross-pollinate between their industry strengths. IBM's Tivoli is strong in the financial services industry while Micromuse has a large base in telecommunications.

Micromuse's customer base includes carriers Deutsche Telecom, Cox Communications, Virgin Atlantic, NTT, Swisscom Mobile, Shanghai Telecom and Verizon.