India-based technology company HCL Technologies has announced a $1.8 billion deal with IBM to acquire a swathe of the company's software products, including the products formerly known as Lotus Notes and Lotus Domino.
Coming less than two months after IBM splashed $34 billion on the acquisition of open source computing specialist Red Hat, the company has announced a deal with HCL Technologies to sell on a large collection of business- and development-focused software products, including the Notes and Domino productivity packages the company received following its hostile takeover of Lotus in 1995.
'Over the last four years, we have been prioritising our investments to develop integrated capabilities in areas such as AI for business, hybrid cloud, cybersecurity, analytics, supply chain and blockchain as well as industry-specific platforms and solutions including healthcare, industrial IOT, and financial services. These are among the emerging, high-value segments of the IT industry. As a result, IBM is a leader in these segments today,' claims John Kelly, IBM senior vice president for Cognitive Solutions and Research. 'We believe the time is right to divest these select collaboration, marketing and commerce software assets, which are increasingly delivered as stand-alone products. At the same time, we believe these products are a strong strategic fit for HCL, and that HCL is well positioned to drive innovation and growth for their customers.'
'We continue to see great opportunities in the market to enhance our Mode-3 (Products and Platforms) offerings. The products that we are acquiring are in large growing market areas like security, marketing, and commerce which are strategic segments for HCL. Many of these products are well regarded by clients and positioned in the top quadrant by industry analysts,' adds C. Vijayakumar, president and chief executive officer at HCL Technologies. 'The large-scale deployments of these products provide us with a great opportunity to reach and serve thousands of global enterprises across a wide range of industries and markets. I am confident that these products will see good growth trajectory backed by our commitment to invest in product innovation coupled with our strong client focus and agile product development. In addition, we see tremendous potential for creating compelling "as-a-service" offerings by combining these products with our Mode-1 and Mode-2 services.'
The deal sees IBM trade ownership of the products formerly known as Lotus Notes and Lotus Domino along with on-premise marketing automation platform Unica, digital experience platform Portal, collaboration platform Connections, device management service BigFix, and application development tool Appscan, alongside the on-promise e-commerce solution unimaginatively named Commerce. IBM has confirmed that it has an ongoing licensing deal with HCL for five of products, but has not detailed which five.
IBM's share price took a hit on the announcement before recovering ahead of a more general slide towards the end of the week's trading; HCL took a more substantial five percent hit from which it has not yet recovered.
May 15 2020 | 11:00