IBM's Informix buy--a billion dollars worth of benefit?

IBM's Informix buy--a billion dollars worth of benefit?

Summary: So IBM is buying Informix Software, Informix Corp.'s database unit and the heart of the company.

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So IBM is buying Informix Software, Informix Corp.'s database unit and the heart of the company. Good for Informix--a billion dollars is a lot of money. I'm not so sure, however, that it's a bargain for IBM.

Informix is an example of a company that persevered and succeeded. The company was founded in 1980, and by the early '90s it had become the premier Unix database vendor. But when it tried to move its database to other platforms, it ran up against Oracle, Sybase, and a host of platform-specific competitors. Over the last several years, Informix struggled to grow. Nevertheless, it built a stable of business applications for online transaction processing, data warehousing, and knowledge management around its database, which enabled it to establish a beachhead in such vertical market sectors as retail, financial services, government, health care, manufacturing, media and publishing, and telecommunications.

Informix's story has been one of slow growth, but recently that growth turned negative. The company's financial performance, released last Tuesday, the same day the IBM purchase was announced, shows falling revenue and profits compared with last year. Nevertheless, Informix's management has prudently socked away more than $250 million in cash, and the company has no debt on its balance sheet.

As for IBM, it didn't exactly plug a hole in its product lineup by buying Informix. Its DB2 relational database has been on the market for more than a decade and has a thriving market, including its own international users group.

However, Informix provided some unique technology that made it especially attractive, according to Jeff Jones, senior program manager for IBM Data Management Solutions. From Informix's Dynamic Server and Extended Parallel Server database engines, IBM hopes to learn new forms of parallel processing, new forms of indexing, and new performance ideas it may be able to bring to DB2. Some of Informix's DataBlades (which Informix got with its Illustra acquisition) are similar to DB2's Extenders, but others fill important niches. Jones says IBM will look for ways to weave in technology from Informix's RedBrick Decision Server for data warehousing and decision support with DB2 and DB2 Warehouse Manager; it will look for similar synergies between Informix's Cloudscape mobile and embedded database and DB2 Everyplace Server.

IBM says DB2 "will remain IBM's flagship database product." Jones says Informix's 100,000 customers will help IBM gain market share to compete with Oracle. Still, the company should realize that the whole is less than the sum of the parts when a company has two overlapping database offerings.

If I were an Informix user, I wouldn't be making contingency plans for migrating to DB2 (or any other platform) simply because of this announcement. If Lotus is any indication, IBM has a good record of letting a major acquisition continue its primary mission. Expect to see the parent company focus Informix on providing synergies with other IBM products and trimming away non-essential forays into marginal lines of business. IBM won't walk away from an investment of this size, and its deep pockets should provide a reassuring measure of stability to its Informix users.

Will IBM get its money's worth from this deal? Talk Back below. Lee Schlesinger is executive editor of ZDNet's Business & Technology Channel.

Topics: Data Centers, Data Management, Enterprise Software, IBM, Software

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