Acquisition of IBM’s Select Assets: Power Fuel for HCL’s Transformation?
The Technology Industry is witnessing a major transformation especially among its established players. Fear of unknown adjacencies and urgency to leverage on known ones is driving the technology leaders’ adaptation to changes.
MarketsandMarkets™ strongly believes that having a foresight on a new revenue mix and enhancing the company’s relevancy are the key to survive for any company in the fast-changing technology world. This belief is reflected in the M&A strategies of IBM and HCL.
IBM’s urge to become a leader in the hybrid cloud market, which is the future of majority of top 10 firms in every market segment, is clearly visible through its Red Hat acquisition and divestment of legacy stand-alone products. On the contrary, HCL’s aim to move away from labor-intensive software services business to IP (Intellectual Property)-driven business is backed the USD 1.8-billion acquisition of 7 IBM IPs.
IBM’s old revenue mix has become HCL’s new revenue mix. The IBM–HCL deal seems to have similarities with the IBM–Lenovo deal done in the past; for Lenovo, it was hardware; whereas for HCL, it is software product assets / IPs from IBM.
HCL’s acquisition of select IBM IPs / products through a transitional mode is a strategic move for gaining control over the nuances prior to adding them to its portfolio. HCL’s relationship with IBM as a development partner for 5 of the 7 acquired products should have equipped HCL with know-hows and better visibility on monetizing the acquired assets. It is a win-win deal for both IBM and HCL as their long-term relationship will continue, in which, both the companies will sell each other’s technologies.
IBM Products Acquired by HCL:
HCL has adopted an innovative “Mode 1-2-3” strategy to enhance its competitiveness in the digital transformation era.
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