IBM's Deals with Ilog and Rackable

IBM Corp. announced it plans on acquiring Ilog SA, a French business software company. In other news, IBM and Rackable Systems Inc. entered into an agreement whereby Rackable will offer IBM BladeCenter servers inside its ICE Cube modular data centers.

Focal Points:

• IBM and Ilog announced they have signed an agreement for IBM to purchase ILOG by way of concurrent cash public tender offers in France and the United States. The tender offer amounts to an aggregate purchase price of approximately €215 million or approximately $340 million on a fully diluted basis. ILOG was founded in 1987 and employs more than 850 people worldwide. Through this proposed transaction, IBM will combine its business process management (BPM), business optimization, and service oriented architecture (SOA) technologies with ILOG’s Business Rules Management Systems software. Ilog has been an IBM business partner for more than a decade.
• IBM's arrangement with Rackable enables Rackable to offer IBM's BladeCenter servers inside its self-contained, portable Integrated Concentro Environment (ICE) Cube modular data centers. The ICE Cube modular units will be outfitted with IBM’s most rugged, high performance BladeCenter systems – BladeCenter T or HT blade chassis – for harsh environments and demanding conditions. The agreement also gives Rackable access to IBM's Tivoli management software. A fully configured Rackable ICE Cube container can pack as many as 1,344 dual-socket IBM blades using quad-core Xeon processors or 672 four-socket systems that use dual-core Advanced Micro Devices Inc. Opteron chips. The ICE Cube modules are available in 20 or 40 foot container sizes.
• The two companies are also competitors within the modular data center space. IBM recently announced its own portable data center using its iDataPlex array for building cloud infrastructures and supporting Web 2.0 environments. Rackable is also joining Blade.org, the industry consortium driving open innovation in blade-based solutions, and plans to contribute to development and innovation around IBM's BladeCenter platform. IBM first began opening up its BladeCenter architecture in 2004. This move enabled a growing community of over 500 technology companies like Rackable to download the specifications for free, develop products for the BladeCenter ecosystem and shape the direction of the blade server platform, according to IBM.

Experton Group believes IBM's deal with Rackable is part of a larger strategy aimed at regaining blade system market share and leadership. At one point IBM was the blade market leader but the company now trails Hewlett-Packard Co. by a decent margin. By creating partnerships and new innovations IBM hopes to turn this around.

Modular data centers offer energy efficient solutions to the demand for dense data centers located outside of traditional environments and IBM's multiple offerings give it alternative solutions to address different company, industry, and environmental conditions. The deal also gives Rackable the ability to offer a broader range of solutions including those of a Tier 1 provider. Lastly, IBM's acquisition of Ilog is part of the company's long history of purchasing software companies to fill in missing functionality. IT executives in need of environmentally challenging data centers should talk to preferred providers such as HP and IBM as well as specialized players like Rackable to ensure the vendors' current offerings and strategies map to corporate requirements.