IBM Buys What’s Left of Informix

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IBM Buys What's Left of Informix
M. Reed - May 2, 2001

Event Summary

IBM (NYSE:IBM) and Informix Corporation (NASDAQ: IFMX) announced that they have entered into a definitive agreement for IBM to acquire the assets of Informix Software (the database portion of Informix Corporation, which remained after the spin-off of Informix Business Solutions into Ascential Software), in a cash transaction valued at $1 billion. IBM feels that the acquisition strengthens their presence in the fast-growing distributed database business, a key strategic priority for IBM. IBM's distributed database revenues grew 36% year-to-year in the first quarter of 2001.

What remains of Informix Corporation will be folded into Ascential Software and become an independent company under the Ascential name. To attempt to explain the somewhat convoluted genesis of Ascential Software, the company was created in January of 2001 from what was known as Informix Business Solutions. This division, which contained all of Informix's business intelligence solutions, had been split off shortly after Informix acquired Ardent Software in late 1999. For more information on the genesis of the Ardent acquisition, see "Informix to Acquire Ardent Software-Another Vendor's Attempt at End-to-End Data Warehousing".

After the deal closes, expected in the third quarter of 2001, Informix, a name that has long been a fixture in the Bay area, will cease to exist.

"Customers are aggressively investing in data management software because data collection, storage and use are at the core of a successful e-business," said Sam Palmisano, president and chief operating officer of IBM. "This acquisition of Informix allows IBM to bring the benefits of leadership database technologies to more customers faster."

Once the acquisition is completed, IBM has stated that it will:

  • Integrate Informix database business operations and personnel into the existing IBM Data Management Solutions Division of the IBM Software Group, headed by general manager Janet Perna.

  • Market and sell Informix's database products worldwide through an integrated IBM and Informix sales force.

  • Maintain existing relationships with Informix customers and business partners, including support for and updating of current Informix products.

"The acquisition by IBM is good news for Informix Software's database customers, partners, employees and stockholders," said Peter Gyenes, chairman and chief executive officer, Informix Corp. "IBM offers the global resources, investment protection, support and technology leadership our customers and partners need for the future, as well as exciting opportunities for our employees. This acquisition also extends the reach and relevance of key Informix technologies as they are evolved and integrated into future versions of IBM data management offerings."

Market Impact

This announcement is not unexpected. Informix has had problems with unprofitable quarters many times in the last few years, and has seen a steadily eroding market share in the relational database market. IBM, on the other hand, has had steadily increasing market share and has shown strong gains against rival Oracle Corporation. The acquisition gives IBM access to a large and exceptionally loyal customer base (100,000 customers worldwide), a pool of highly skilled employees, and perhaps most importantly, a much stronger foothold in the database market on UNIX and Windows NT, complementing their traditionally strong presence in the mainframe and AS/400 worlds.

On the positive side, existing Informix customers can now be assured that a financially viable corporation will still provide support for the products, whereas the continued existence of Informix as a going concern was growing increasingly questionable. According to Steve Mills, senior vice president and group executive at IBM Software, "Informix customers can be confident that their investments in existing Informix products are secure. These customers will now have a long-term growth plan that enables them to achieve the full potential of e-Business."

On a side note, it appears to TEC that Informix "just pulled a Gupta". For those who remember Gupta in the early to mid-1990s, they were a fairly successful database vendor with a product called SQLBase. When it got to the point that they were only turning a profit on an application development product called SQLWindows, they de-emphasized the database and changed their name to Centura Software. Sound familiar? For many years we have expected Informix and Sybase to suffer a similar fate. For Informix, the time is now. Sybase, on the other hand, has made a remarkable comeback in the last few years, and appears to be in the game for the long haul.

Overall, there are only two RDBMS vendors left on the landscape, IBM and Oracle. TEC believes that, after the dust settles, IBM will have retained at least 85% of existing Informix customers (90% probability), which will undoubtedly give Oracle cause to keep an eye out over their corporate shoulder.

User Recommendations

Customers engaged in the selection of relational database management systems should certainly consider IBM's offerings, but should take Informix off the list. We consider it unlikely that IBM will put any type of marketing push behind existing Informix database offerings, and will attempt instead to sell IBM's own DB2 product, which will, over time, benefit from technology integrated from Informix's products, including "datablades", which provide support for complex datatypes such as spatial, time-series, and web data; business intelligence technologies from Red Brick; RDBMS features in Informix database products; and some of the features of Informix Cloudscape.

Existing Informix customers can take comfort from the statement by Janet Perna, general manager of IBM's data management software division, "DB2 will continue to be the foundation of IBM's database offerings, but IBM will continue to maintain Informix's product line. No customer will be forced to migrate to DB2". However, TEC does consider it likely that IBM will "stabilize" the Informix product line over time, which means that current releases will be maintained and bugs will be fixed, but no new major releases will be made available. Going forward, as new versions of hardware and software are implemented in a customer's environment, continued use of the stabilized product will become difficult to the degree of being untenable.

Exceptions to this are that Informix Dynamic Server 9.3 is still planned for this year, with a new release of XPS slated for next year. IBM has the stated intent of revisiting the stabilization issue with existing Informix customers and revising release schedules so that the minimum number of Informix customers are "disenfranchised". IBM has also explicitly stated that Informix's Arrowhead project (a product integration effort) will be discontinued, as IBM feels that "IBM's DB2 UDB is already where Arrowhead wanted to be".

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