FT : HP Counters IBM With Opsware & Neoware Purchases

Tuesday, July 24, 2007

Taking a cue from rival IBM, Hewlett-Packard signaled on Monday that it is buying its way into the software business, offering $1.6 billion for Opsware (co-founded by Web entrepreneur Marc Andreessen ; software is used to automate the operations of corporate datacentres such as sending out security patches or installing operating systems for a large number of servers) and $214 million for Neoware.  The all-cash deal for Opsware comes a year after its $4.6bn purchase of Mercury Interactive, HP’s first big acquisition since Mark Hurd took over as chief executive, and is part of HP’s strategy of offering a comprehensive software line for managing corporate data centers.  Neoware makes thin client and virtualization software for centralizing management of corporate desktop computers.  The software will be combined into the business desktop unit of HP’s PC business and will boost the company’s Linux business, HP said.

HP’s software business contributes only an estimated 4% to its revenues, with about half of that coming from its HP Software division, which specialises in business technology optimisation and other high-growth parts of the business.  By comparison, IBM, which has also stepped up software acquisitions over the past year, generated about 20% of its revenues in the most recent quarter, with just over half coming from its high-growth “middleware” products.  HP and IBM get the rest of their software sales from maintenance associated with older software products that are no longer showing growth, such as their Unix-based operating systems.

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