IBM Exec: Big Will Get Bigger 2

IBM's acquisition of Alphablox is an example of how the company will continue to build out its offering of middleware infrastructure for businesses, Steven Mills, senior VP for software, said Wednesday at the Innovation Summit in Palo Alto, Calif.

"The big will get bigger. You will see more acquisitions," he predicted to the 600 attendees of the emerging-technology conference at Stanford University.

Microsoft, with annual revenue of $25 billion, "will very likely continue to be the largest" software company, Mills said, adding ruefully: "They have the Windows and Office application franchise. All they have to do is raise prices and revenues go up. It's an extraordinary business that way."

Alphablox is a supplier of business-intelligence components for in-house enterprise applications. Its acquisition expands IBM's portfolio of data-mining and database tools, said Mills.

Software represented $15 billion of IBM's $89 billion in annual revenue in 2003, and the company is increasingly being called upon to supply software that can support "a level of integration and flexibility that allows a business to be more efficient." In addition to such old standbys as WebSphere MQ, the former MQ Series messaging software, and WebSphere Business Integration Server, IBM needs to supply on-demand computing or real-time features to its middleware suite, he said.

The Alphablox acquisition will further that goal by allowing companies using IBM's DB2 and other database products to build data-analysis capabilities into their applications. The acquisition is the latest in a series by IBM. On June 7, IBM completed its purchase of Candle Corp., a supplier of mainframe-management software.

Early last year, IBM acquired tools vendor Rational Software, which became the Rational unit of the IBM Software Group. It acquired Green Pasture Software, maker of document-management software, in December 2003. It acquired the Informix database company in 2001.

Asked to comment on competitors' ability to deliver flexible software infrastructures, Mills commented that "HP has shown an interest in acquiring software companies, but acquiring companies doesn't solve the problem." He said acquired technology need to be integrated into an overall infrastructure and then be supported by the acquiring company.

Mills said his greatest fear in managing IBM's software business is that he will set one policy but his large, multifaceted organization will end up executing another through misunderstanding. "You end up saying the same thing over and over again eight or 10 times," he said. "You become enormously annoying to people."