Enterprises are watching a fascinating transformation of the Web services vendor landscape.
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Mergers and acquisitions have been steady this year, and today the latest union was announced when management firm Actional Corp. and security vendor Westbridge Technology Inc. hooked up.
The new company will operate under the Actional name, but this is a merger in the truest sense. Executives from both companies will run day-to-day operations. No cash was exchanged, instead $12.8 million in funding from investors of both vendors has been funneled to the merged company. Actional said it will support all Westbridge products and existing customers.
Actional also announced the first product from the merger, SOA Command and Control, a management platform that provides enterprises a complete view of a service-oriented architecture.
The merger is the latest in a string of movement in the Web services market, punctuated most recently by Computer Associates International Inc.'s acquisitions of Netegrity and Adjoin, Hewlett-Packard's acquisition of Talking Blocks and Digital Evolution's acquisition of Flamenco.
Analysts said the spate of mergers and acquisitions validates the emergence of Web services and service-oriented architecture as a legitimate enterprise technology and strategy.
"Even though organizations are building traction with Web services, it will be a lot easier if they have well-integrated [products]," said Sandra Rogers, director of Web services software and integration at International Data Corp., of Framingham, Mass. "Security and management are foremost on the minds of organizations starting Web services projects. They want to be able to secure and manage at the lowest levels."
Tom Ryan, former Westbridge CEO and the new CEO at Actional, said the two companies have been pursuing partnerships for about a year before the talks evolved toward a full-fledged merger. Ryan said Westbridge was the pursuer in this deal.
"This is driven by demand in the marketplace. More customers are facing the reality of how to integrate technologies and get to the next level," Ryan said. "Partnerships only get you to a certain level. A merger is the only way to service the marketplace. We approached Actional and quickly realized we had a winner in terms of complementary products and teams."
ZapThink LLC co-founder and analyst Ronald Schmelzer said more consolidation is inevitable in this market.
"You're starting to see more of these where it makes sense. Many of these standalone vendors are partnering as they try to establish a bigger front against IBM, HP and CA," Schmelzer said. "They'll either be absorbed, or they'll have to band together."
Merging management and security capabilities, meanwhile, is a natural, analysts said. Westbridge's XML Server, which is an XML firewall and security services infrastructure, complements Actional's Looking Glass management products, addressing two areas of concern for companies deploying Web services and SOA.
"I think the timing for the merger is spot on," Ryan said. "Eighteen months ago, it would have been early. A lot of people were in the stage where they wanted to be educated on Web services. Six months ago, it started to pay dividends as more companies started using the technology in production."
The early adoption stage ended early this year, Ryan said and in the last six months companies have moved toward mainstream adoption.
"These are two core pieces that had two come together," said Actional chief technology officer Daniel Foody.
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