IBM buys cloud-based analytics company for $440M

Big Blue's acquisition of DemandTec latest in rush among IT giants to score cloud companies to boost their software-as-a-service offerings.

IBM has agreed to pay US$440 million to buy DemandTec, a Web-based analytics software company, in what seems to be a race among IT bellwethers in acquiring smaller cloud players.

IBM's deal marks the third major cloud acquisition seen in recent months, after SAP bought SuccessFactors for US$3.4 billion last week and Oracle purchased RightNow Technologies for US$1.5 billion in late-October. San Mateo, California-based DemandTec creates software to help companies decide on the best price-points and product mix based on analyzing customer buying trends.

The acquisition will extend IBM's Smarter Commerce initiative with cloud-based price, promotion and other merchandising and marketing analytics, Big Blue said in a statement Thursday.

"IBM estimates the market opportunity for Smarter Commerce at US$20 billion in software alone. Extending these capabilities to the cloud gives organizations immediate access to consumer information, providing instant return on investment," it added.

The combination of DemandTec and IBM will help marketing and sales executives in retail and other industries drive more revenue and increase profitability, said Craig Hayman, IBM's general manager of industry solutions.

Barrington Research analyst Jeff Houston told Dow Jones Newswires that it made sense for DemandTec to be part of IBM. "IBM can be selling a company like Target or Wal-Mart a big multimillion-dollar IT project and slap DemandTec into that," he said.


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