Update on IBM’s Acquisition of Platform Computing

Despite my best efforts, I have been unable to obtain specific details relating to the price that IBM paid to acquire high-performance computing (HPC) workload-management pioneer Platform Computing. If anything further surfaces on that front, I’ll let you know.

In the meantime, others have made some good observations regarding the logic behind the acquisition and the potential ramifications of the move. Dan Kusnetzky who has longstanding familiarity with Platform in both a vendor and analyst capacity, provides a succinct explanation of what Platform does and then provides the following verdict:

“I believe IBM will be able to take this technology, integrate it into its “Smarter Computing” marketing programs and introduce many organizations to the benefits of harnessing together the power of a large number of systems to tackle very large and complex workloads.

This is a good match. “

Meanwhile, Curt Monash recounts details of a briefing he had with Platform in August. He suspects that IBM acquired Platform for its MapReduce offering, but, as Kusnetzky suggests, I think IBM also sees a lot of untapped potential in Platform’s traditional HPC-oriented technical markets, where the company already has an impressive roster  of blue-chip customers that have achieved compelling business results in cost savings and time-to-market improvements with the company’s cluster-management and load-sharing software.

There’s a lot of bluster about the cloud in relation to this acquisition, and that undoubtedly is a facet IBM will try to exploit in the future, but today Platform still does a robust business with its flagship software in scientific and technical computing. 

Platform apparently told Monash that it had “close to $100 million in revenue” and about 500 employees. The employee count seems about right, but I suspect the revenue number is exaggerated. According to a CBC news item on the acquisition, market-research firm Branham Group Inc. estimated that Platform generated revenue of about $71.6 million in its 2010 fiscal year. Presuming the Branham numbers to be correct, Platform would have 2011 fiscal year revenue ranging from $75 million to $80 million.

Finally, Ian Lumb, formerly an employee at Platform (as was your humble scribe) considers the potential implications of the acquisition on Platform’s long-heralded capacity to manage heterogeneous systems and workloads for its customers. This is a point that many analysts missed, and Lumb does an excellent job framing the dilemma IBM faces. Ostensibly, as Lumb notes, it will be business as usual for Platform and its support of heterogeneous systems, including those of IBM competitors such as Dell and HP.

But IBM faces a conundrum. Even if it were to choose to continue to support Platform’s heterogeneous-systems approach in deference to customer demand, the practicalities of doing so would prove daunting. Lumb explains why:

“To deliver a value-rich solution in the HPC context, Platform has to work (extremely) closely with the ‘system vendor’. In many cases, this closeness requires that Intellectual Property (IP) of a technical and/or business nature be communicated – often well before solutions are introduced to the marketplace and made available for purchase. Thus Platform’s new status as an IBM entity, has the potential to seriously complicate matters regarding risk, trust, etc., relating to the exchange of IP.

Although it’s been stated elsewhere that IBM will allow Platform measures of post-acquisition independence, I doubt that this’ll provide sufficient comfort for matters relating to IP. While NDAs specific to the new (and independent) Platform business unit within IBM may offer some measure of additional comfort, I believe that technically oriented approaches offer the greatest promise for mitigating concerns relating to risk, trust, etc., in the exchange of IP.”

It will be interesting to see how IBM addresses that challenge. Platform’s competitors, as Lumb writes, already are attempting to capitalize on the issue. 

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