IBM completes formalities to acquire Rational Software

Thursday, 27 February 2003, 08:00 Hrs
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BANGALORE: IBM has strengthened its position in India's huge developer community, the second largest in the world after the U.S., with the completion of formalities in its acquisition of Rational Software.

The $2.1 billion acquisition provides IBM's software group a neat footprint into India's application tools market, in which Rational Software enjoys a leadership position of 55 percent.

More importantly, it provides IBM, also known as the Big Blue, the opportunity to establish itself as "the largest middleware (software that connects different systems, applications and platforms and provides the fundamental building blocks for e-business) company in India in 2003," Frank Luksic, country executive, software group and developer relations, IBM India, told IANS.

"Rational is the centre-piece of 'on demand' e-business strategy. This is what we have told the software group. India has the second largest developer community in the world, after the U.S., and it is growing faster than anywhere else," Luksic said.

The software group has all the capabilities that provide e-business solutions and applications on top of the existing infrastructure. The only missing link for the Big Blue is tools for the developer community to build applications.

Rational has 350 employees in offices in six locations in India who are already providing open, industry standard tools for building business applications and software products and systems, including embedded software for devices such as cell phones and medical systems.

"The combination (of Rational's tools and IBM's other products) sends out a powerful message to the market place," Luksic added.

Industry officials said the combination in India would certainly make a difference.

"It will help IBM to sell its other products to big customers in India with the high-end tools of Rational," said one industry official.

"IBM can also use Rational's channels to push through its product line to enhance its share in the middleware market. It is, basically, a mind-share game, say in preparation for the larger battle over web services with Microsoft," another industry source said.

But Luksic and M.K. Bharatee, country manager, Rational division, IBM, insisted it was not a mind-share game.

They pointed out that both Microsoft and IBM, rivals in the Net software market, use Rational's tools. They said the Rational division of IBM, the fifth brand of the software group, would continue to support the Microsoft platform.

"We look at customers, not competition, because if you look at competition, you don't look at the customer. The marketplace is such today that it is not competition but 'coopetition (cooperation-competition)'," Luksic said.

"We will continue to come up with upgrades for the Microsoft platform. The strategy is not to squeeze out Microsoft," Bharatee added.

IDC estimates the market opportunity for application development software to grow from $9 billion in 2002 to $15 billion in 2006 globally. And, with the second largest developer community in India, the stakes are high for the Big Blue.

Source: IANS
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