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HCL Acquires Selected IBM Software Businesses: Lotus Notes, Domino, Tivoli

HCL Technologies has acquired selected IBM software businesses -- including some classic Lotus Notes, Domino and Tivoli products -- for $1.8 billion.

Ginni Rometty, formerly CEO, IBM
IBM CEO Ginni Rometty

The deal highlights IBM CEO Ginni Rometty's effort to improve the company's revenue mix -- especially as the company prepares to digest Red Hat for more than $34 billion.

Still, the HCL deal also highlights IBM's failure to navigate the shift from client-server to SaaS business models on multiple products in multiple market segments.

The IBM Software asset sales to HCL include:

  • Appscan for secure application development,
  • BigFix for secure device management,
  • Unica (on-premise) for marketing automation,
  • Commerce (on-premise) for omni-channel eCommerce,
  • Portal (on-premise) for digital experience,
  • Notes & Domino for email and low-code rapid application development, and
  • Connections for workstream collaboration.

HCL and IBM have an ongoing IP Partnership for five of these products, the two companies said.

IBM Software History: Hits and Misses

IBM acquired Lotus for $3.52 billion in 1995 and Tivoli for $743 million in 1996. Lotus Notes and Domino ranked among the top client-server groupware and email systems in the 1990s -- competing head-on against Microsoft Exchange. But while Microsoft made a successful transition to Office 365 in the cloud, Notes and Domino largely missed the cloud era.

Tivoli, meanwhile, ranked among the Big Four IT management software providers -- competing head-on against CA Technologies, BMC and HP in the 1990s and early 2000s. Each of those companies stumbled a bit as global 2000 companies pursued simplified IT management platforms in recent years -- opening the door for ServiceNow to disrupt major portions of the market.

IBM Business Evolution

Even as it sheds some software assets, IBM is doubling down on the software market in other areas. The company's pending Red Hat buyout, valued at around $34 billion, potentially gives IBM a strong software footprint in on-premises data centers and third-party clouds.

Some media coverage suggests that the IBM-Red Hat combo will compete head-on against Amazon Web Services (AWS) and Microsoft Azure. But that isn't entirely correct. Red Hat does not have a big IaaS or SaaS business. Rather, Red Hat's software typically runs on third-party public clouds -- including AWS, Azure and certainly IBM Cloud. It's also widely deployed on-premises, which means IBM could gain a strong hybrid cloud story.

Still, the IBM-Red Hat deal also highlight's IBM's urgent need to shake up its own business as more and more customers shift workloads to AWS, Azure and to some extent Google Cloud Platform.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.