IBM is buying analytics software and solutions provider SPSS in an all cash transaction at a price of $50/share – a 42 percent premium to Monday’s closing price of $35.09 on Nasdaq – resulting in a total cash consideration in the merger of approximately $1.2 billion. The acquisition is subject to SPSS shareholder approval, regulatory clearances and other closing conditions, and is expected to close later in the second half of 2009.
Big Blue said the acquisition of the publicly-held Chicago company was expected to strengthen its information-agenda initiative, which helps companies take information and turn it into a strategic asset. IBM shares fell 67 cent to $116.96 in pre-market trading, while SPSS shares jumped 41 percent to $49.59.
A message from SPSS Chairman, CEO & President Jack Noonan:
We and IBM view this as a highly-complementary move from both a technology and a market position perspective.
We’re excited about this agreement and the positive prospects that SPSS and IBM can achieve together in continuing to lead an industry that we helped shape. The depth and breadth of IBM’s resources, its customer and market reach can only enhance our ability to address the growing market for Predictive Analytics.
In joining with IBM, we will advance Predictive Analytics as a competitive advantage for companies and organizations worldwide. We see this as a transformative event that will accelerate the adoption of Predictive Analytics.
Between now and the acquisition close, we will continue to support our customers and partners in normal fashion. Existing contracts will remain in effect, account relationships and support infrastructure will remain unchanged.
Predictive analytics software captures and analyzes data about people’s attributes, attitudes and behaviors to gain a full understanding of anticipated future behaviors, so companies can make smarter decisions for improved business outcomes.
IBM says it will continue to support and enhance SPSS technologies while allowing customers to take advantage of its own product portfolio. SPSS will become part of the Information Management division within the Software Group business unit, led by Ambuj Goyal, General Manager, IBM Information Management.
Update – In other news: IBM also acquired Ounce Labs, a provider of enterprise source code security testing and intends to integrate it into its Rational software business. Financial terms were not disclosed.
I guess IBM is trying to “Become a predictive enterprise” with this acquisition. I see it as a great move, hope it works for them.
I thought that IBM was looking at acquiring more companies with high-end analytics. They already acquired ILOG recently. I think that SPSS, SAS, Oracle and KXEN are current the top 4 in enterprise analytics. Personally, I would put KXEN at the top spot, and the other 3 are tie at number 2 spot. I am surprised that IBM didn’t go for KXEN . May be Oracle will gobble up KXEN at some stage.
Sorry for the critique: Seems a bit odd to describe it “the privately-held Chicago company” . off course it’s not governmental but it is public listed.
Thanks, was supposed to be publicly-held, of course. Updated.
In the realtime world, analytics is going to be the name of the game and being able to predictive for real pays the way.
SPSS = TRADITIONAL ANALYTICS VENDOR
The traditional analytics market has outdated onpremise client server technology. Companies like Hyperion (Oracle), SAS, SPSS, Business Objects (SAP), Outlooksoft (SAP) are in this camp. IBM is essentially buying a legacy vendor whose software it can sell to its huge customer base and then offer professional services which is IBM’s bread-and-butter. Nothing special about this acquisition.
Great deal, guys!
Last week Software AG from Germany bought IDS Scheer and German SAP AG bought SAF Software from Switzerland!
So #mergerMania going on as we said on our BLOG http://www.spirofrog.de/blog
IBM just acquired Ounce Labs as well. A little money in the pockets let the shopping spree begin.
this is GREAT!
The lesson from the Netflix prize is that 10% analytic improvement is the best you can expect, and even that only from a few rare and totally dedicated teams. Ah, and you have to wait YEARS.
so what can we expect from the rest of us? 1%? 3%? one really has to scratch his head what this whole “predictive analytics” worth.
off course, not a word about the tremendous success of these models in Wall Street.
The lesson from the Netflix prize is that
a totally dedicated team working years can expect an improvement of 10% over
an already tremendously successful predictive analytics solutions from one of the best teams in the world.
You can keep scratching your head.
exactly. in normal conditions in the “enterprise analytics”, you can only dream to get this 10% (or megan fox. your chances in both cases will be similar).
You are not getting the point.
not that i’m not trying, though
No, the lesson from Netflix is that it’s really hard to improve on the algorithm from a company that’s one of the best in the world at predicting what it’s customers want.
In the meantime, there are thousands of other companies that suck at predictive analytics, so they turn to SPSS and other vendors.
Think what a 10% improvement would mean to credit card and catalog companies that spend billions on postage every year.
Exactly!
Mark said…
to scratch his head what this whole “predictive analytics” worth.
Loo no further than Amazon. Is it worth it having an automated item recommender system in place, even with a 1% improvement ?
I’ll leave that question to you to ponder, but I will give you a hint. Google search for name Dr. Ronny Kohavi (former Amazon head of Data-mining who now works for Microsoft) and you can download his papers from his site or just read them online and you can see what 1% improvement can get you in monetary returns and we’re talking millions here boy.
Now, can you see why predictive analytics is so important? Having no analytics is akin to crossing a busy street blind-folded in today’s business envrionments.
In more interesting news, Qualcomm and Verizon are in a joint venture which would “use chip maker Qualcomm’s wireless technologies and a device certification process that Verizon Wireless has already established to allow network support for mobile devices it does not sell itself.”
http://www.reut...20090728?rpc=44
Hmm…who’s device might go on a system like that???
An interesting deal. SPSS was formed in 1968 so it’s no spring chicken and I doubt they sit on bean bags. Probably an ideal fit for IBM in terms of culture but questionable how ‘now’ their solutions are.
I suspect they fit into the, “this is what people recently did” category rather than the, “this is what someone JUST did so let’s serve them something more relevant”
We integrate with SPSS the software (now called PASW) allowing your data to be exported into their format and we have considered deeper integrations with their other products like Clementine. We have had conversations with them about the challenge of none IT folks collecting data easily enough while still getting it up into the enterprise data storage. I wonder what the future holds data in and out of these products with IBM in control.
Robin sweety, why the fuck are you NOT writing about twitter. You should be fired instantly.
FAIL
you do know robin is a guy right
Thank you silvaldropout, I depend on you to get that fact OUT there.
haha I thought she was a girl too!!
Monster Cable is going to sue you for trademark infringement for using their name in your headline.
please IBM, improve this terrible SW & save the next gen of confused students…
Well, I predict, in a non analytical sense that this is the end of this applications evolution as a software product. IBM is OK at maintaining software in a steady-state mode, but lousy at evolving software. Also all those SPSS employee’s are going to mostly hate working for IBM.
The acquisition of SPSS – while not finalized – is both logical and and relative no-brainer for IBM.
It provided the coveted vendor-GBS-partner-client-consumer win scenario..tha’s right – the ever-elusive “W5″.
In response to several of the comments criticizing the acquisition, I simply have to respond out of…well…pure disagreement.
For example, the assumption that SPSS is predominently a legacy software acquisition with antiquated technology is hardly an accurate depiction of the world’s most highly respected predictive analytics firm. Frankly, every technology firm of this magnitude is hardly likely to attain such a status without constantly working to improve on their own technological performance and thus – backend infrastructure.
SPSS is no exception and their R&D division is quite a shining example of this.
Secondly, while the citing of NETFLIX as an example of maximum performance increase (approximately 10% was cited as a figure by the person writing the comment) …it should be ‘fervently’ pointed out that the video-rental business model and thus – it’s associated demographics and business model – are NOT prime examples of th ideal retail environment for dramatic highly impactful and dramatic-change oriented predictive analytics. It is a low-margin, slow-change, minimal-variance industry which can in no way generate dramatic financial gains in the short term…as such…10 percent over even 3-5 years would be considered a ‘TREMENDOUS’ accomplishment in such a challenging, competitive marketplace with such strong barriers to long-term revenue change. The biggest/most noticable differences will be found in highly-volatilte financial arenas such as stock pricing, fund management, oil and gas pricing, and weekly-retail pricing war environments….each area promises highly competitive and high-reward opportunities for successful predictive analytics and has done so for a considerable number of years..but is only becoming mainstream with the recent PA Software acquistion wars…which – for those of you who may or may not agree – are only heating up as we speak….fasten your seatbelts…it’s going to be a repeat of the BI vendor merger/acquisition scenario all over again…call your broker!