ServersHP to Acquire Opsware

HP to Acquire Opsware

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Looking to corral the market for automating tedious but vital data center
tasks, HP Monday agreed to buy Opsware for $1.6 billion in cash, a 38 percent premium over Opsware’s Friday closing price of $10.28 a share.

The OEM has bid $1.6 billion in cash for the automation vendor, who is second to IBM in the server provisioning market.

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Opsware’s software is expected to help HP provision servers, networks and storage
devices, and manage any changes in those resources to help companies
reduce upgrades normally completed with manual labor.

Such jobs, including providing patches and upgrading software to newer
versions, is a dull but necessary part of IT that helps businesses meet
corporate compliance regulations, including Sarbanes-Oxley and HIPAA.

HP said in a statement it will use Opsware’s assets with its existing IT
management software, cobbled from previous major buys of Mercury Interactive
and Peregrine Systems, in order to boost its business technology optimization (BTO)

Should the deal close by the end of HP’s fourth quarter, Opsware will become
part of the HP Software business. Opsware CEO Ben Horowitz will lead HP’s
BTO organization, reporting to Thomas E. Hogan, senior vice president of HP

Opsware, co-founded by former Netscape Communications wunderkind Marc
Andreessen, began
in 1999 as a managed service provider called Loudcloud.

In 2002, Andreessen sold off
the managed services division to Electronic Data Systems Corp. and Loudcloud
eventually was reborn as Opsware, focused on automating data center tasks.

The rest is history.

Opsware has been growing steadily. Earlier this year, IDC ranked the
relatively young company No. 2 next to IBM in the server provisioning market.
Server provisioning is a slice of the overall server automation market IDC
claimed will top $10.4 billion in a few years.

Signs that Opsware was being pursued were unmistakable since March.

First, the company bought
IT operations automation startup iConclude for $51 million and reported that
full year revenue for 2006 totaled $101.7 million, up 67 percent from a year

A week later, the company held a high-profile analyst meeting in New York City to discuss in detail the state of the business; afterward, Horowitz and Andreessen met individually with the press in a bid to hammer home Opsware’s viability.

While HP appears be the winner in the Opsware sweepstakes, rivals IBM, CA and BMC should also be seen as bidders in the Opsware market. After all, automating the IT operations in a data center is right in all three companies’ bailiwicks.

On sheer financial resources, IBM would be the most likely candidate to
block HP’s bid, especially now that HP will have the resources to try to
overtake IBM’s leadership position in the server provisioning space.

Opsware isn’t the only company HP pulled out the checkbook for today. The company also said it signed a definitive merger agreement to purchase Neoware, a provider of thin client computing and virtualization solutions, in a stock deal worth about $214 million ($16.25 per share).

This article was originally published on Internetnews.

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