(By Philip Carnelley, 30 Oct 09, 09:45) In a surprise move, Dassault Systèmes is acquiring the IBM operation devoted to re-selling Dassault’s manufacturing software products. It will pay $600m and take on 700 IBM staff. Why surprising? After all, it’s quite common for a software producer to take control of its regional sales from a distributor once the market is established. Yet IBM has been successfully selling Dassault’s products since 1981 (a good Computerworld article here outlines the history of the relationship). Dassault obviously now believes it can do a better job itself by cutting out the middleman – and its margin.
A more interesting question is: why didn’t IBM buy Dassault? Being focused on manufacturing, Dassault is not so well known in the broader software scene, but it’s one of the few big European players – its €1.3bn 2008 revenues make it similar in size to Sage. And IBM has the cash – it spent $37bn on share buybacks in 2006-8, and another $4bn this year. IBM is certainly not averse to big software acquisitions, although with a mooted €5-7bn price, such a deal would trump the $5bn it paid for Cognos last year and $3.5bn for Lotus way back in 1995.
But first IBM would have to persuade French conglomerate Group Marcel Dassault, still a family-run concern, which owns 44% of the stock and 48.6% of the voting rights. Second, and perhaps most important, IBM got out of the apps business many years ago and shows no signs of wanting to get back in. But we wonder whether this position is sustainable, especially as Oracle prepares to buy in Sun and presents a complete offering ‘from the metal up’. Or maybe that’s not such a threat after all!
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