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Now the Minnows are Eating the Minnows

Written By: M. Reed
Published On: October 19 2000

Now the Minnows are Eating the Minnows
M. Reed - October 19, 2000

Event Summary

In a transaction valued at approximately $15 million, small by most standards in the software industry, DataMirror Corporation (TSE: DMC) has completed the acquisition of assets and assumption of certain liabilities of Constellar Corporation. Both companies have been small niche players in the data warehousing market, Constellar being almost exclusively Oracle-based, and DataMirror concentrating on the IBM AS/400. Up to now, they have stayed out of the gun sights of the big boys because of the very vertical niche each has chosen. DataMirror has always been the fastest movement tool on the AS/400 because it was written in the machine's native language (using RPG), but it was very AS/400-centric. Constellar has not been an attractive take-over target due to its absolute requirement for an Oracle database. The product can move data between other platforms, but its backend repository has had to be Oracle. Customers know that a DBA will be required to maintain this database, and if they don't have one in-house, this can be an expensive proposition. The two company's goals appear to be increased access to capital for Constellar, and a foothold in the Oracle market for DataMirror.

Market Impact

DataMirror Corporation, headquartered in Toronto, Canada, is a provider of e-Business data integration and resiliency solutions and has more than 1,100 customers worldwide, including Computacenter, Debenhams, Eurobell and Skandia Life in the UK. The newly combined company will have its US headquarters in Constellar's Redwood Shores, California office. Constellar has customers such as ABN AMRO, General Electric, and Sprint Corporation, and is privately held.

"Through the acquisition of Constellar's technology, DataMirror will strengthen its presence in the global Oracle market,'' said Nigel Stokes, Chairman, President and CEO of DataMirror. "This makes us an even more powerful player, with complete capabilities to integrate and transform disparate data for rapid e-Business success.''

It appears that these two vendors are teaming up to jump on the enterprise application integration bandwagon, along with everyone else. Constellar's newest release, Hub 3.5e, is said to incorporate e-business, B2B, B2C, and web based applications. DataMirror's Transformation Server is being billed as an EAI application with real-time data integration tools. TEC's guess (60% probability) is that the combined company will go after the low hanging fruit first and come out with a bi-directional Oracle-AS/400 data propagation toolset.

It appears that this marriage is one of convenience, in order to make the combined company a more attractive take-over target (70% probability). Potential suitors could include BMC, IBM, the SAS Institute, or companies specializing in AS/400 applications, since most of the major ERP vendors are attempting to get into the data warehousing/business intelligence space to compete with SAP's offerings.

User Recommendations

Customers should be wary of this merger. They should grill the highest level DataMirror/Constellar executives they can arrange meetings with to get as close an idea of the actual product development and integration schedules as possible. It should also be noted that it is not uncommon for companies of this size to be purchased; often any useful technologies are then incorporated into the new parent's products, and the original products get "stabilized" (vendor-speak for "we'll provide tech support but there will be no new development). Perhaps the customers might prefer the term "cannibalized".

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