HP closes $1.6 billion Opsware deal

HP brings Opsware data center automation software under its wing.

HP closes the deal to acquire Opsware, which gives the industry giant a quick ramp to offering customers data center automation.

HP Friday announced it had completed its $1.6 billion acquisition of data center automation vendor Opsware.

The deal, which follows HP's $4.5 billion Mercury Interactive buy, brings data center automation capabilities into HP's Business Technology Optimization (BTO) software portfolio. Opsware CEO Ben Horowitz will lead the BTO organization, reporting to Tom Hogan, senior vice president of HP Software. Opsware will operate as a subsidiary of HP, which could help this acquisition become as successful as HP’s Mercury buy, industry watchers say.

"Mercury was a very successful acquisition by HP; largely because HP did not drastically change anything," reads a Yankee Group report published in July following HP's announcement it would acquire Opsware.

Opsware, which reported a little more than $101 million in fiscal 2006 revenue, could also see sales increase once its products are being sold in HP's channel. "Mercury has seen double-digit growth since the acquisition, which is impressive for a mature technology. Opsware has the same opportunity with HP sales and channels," Yankee says.

The HP-Opsware deal could also impact other data center automation vendors. For instance, BladeLogic filed for an IPO in April and could now see its price go up as it becomes a potential acquisition target for HP's biggest competitor, IBM.

"If IBM is to acquire Opsware's rival BladeLogic, they'll have to pay more. BladeLogic could fetch over $1 billion," the research firm report says. "IBM could approach [automation vendors] Opalis or Network Automation, but they're smaller and their scope is more on run-book automation. They also don't bring the enterprise customers of a BladeLogic."

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