EMC in Smart Management Play With $260M Buy


EMC joined an end-of-year acquisition spree among software makers when it agreed on Tuesday to acquire network management software maker Smarts Inc. for $260 million in cash.

Should the deal succeed, EMC would join IBM , HP , Computer Associates Cisco Systems and others as providers of software systems that diagnose and manage changes in networks on the fly.

Smarts InCharge software provides administrators knowledge about the behaviors and characteristics of IT environments. For example, InCharge automatically finds root cause problems, assesses their impacts across technology domains, and presents admins with the fix to keep business services running.

Mark Lewis, EMC Software EVP, said EMC became enamored of the Smarts technology after fielding customer concerns about reducing network complexity.

"The difference between Smarts and other report systems is that Smarts tells customers what problems exist while others don't tell the customer what's broken," Lewis told internetnews.com. Lewis said Smarts can work alone or as a complement to other management platforms, such as IBM's Tivoli line and EMC's own ControlCenter storage management platform.

Such products are crucial ingredients of utility computing strategies for companies who want to take the onus of network maintenance from human engineers and put it on the software.

While EMC rivals IBM and HP use the software to provide services on demand, EMC sees the Smarts purchase as a way to fortify its information lifecycle management strategy for managing files from the time they are created until they are ready to be destroyed. One of they key pieces of ILM is uninterrupted data flow: Smarts can help deliver that, Lewis said.

EMC's software business has grown considerably during the last two years. The outfit accelerated its ILM pace by acquiring archiving outfit Legato, content management provider Documentum and virtualization concern VMware.

Smarts represents the next piece in the ILM puzzle.

Pund-It Research founder and analyst Charles King said the deal is consistent with EMC's broadening approach to IT management, focusing on the convergence of data and storage networks.

"That makes sense for a couple of reasons," King told internetnews.com. "First, effectively dealing with the growing complexity of IT infrastructures requires a more systemic approach than was once the case. Second, as system vendors like IBM and HP have found increasing success with a 'whole' system approach, specialists like EMC need to find ways to compete directly with such solutions."

Smarts, of White Plains, N.Y., is expected to reap $60 million in 2004 revenues. The company's software can be deployed either stand-alone or integrated with existing systems management frameworks.

EMC expects to consummate the purchase in the first quarter of 2005 and will tuck Smarts into its software group, along with its 300 employees. Smarts President and Founder Shaula Alexander Yemini will join EMC's office of the CTO.

The purchase is part of a year-end software shopping spree. Oracle's $10.3 billion purchase of PeopleSoft was accepted two weeks ago.

Last Thursday, Symantec topped all software purchases by agreeing to buy Veritas Software for $13.5 billion. Analysts labeled this deal a sure sign of the convergence of security and storage.

On Monday, Cisco moved to acquire network security gear concern Protego Networks for $65 million. Cisco will use Protego's security monitoring and threat management appliances to pad its portfolio.


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