Opsware Opens Its Wallet

Data center software vendor Opsware Inc. has stumped up $33 million for network automation specialist Rendition Networks in an effort to broaden its product line and extend its customer base.

With businesses increasingly deploying complex Web-based applications, IT managers often need to tweak their data center kit to provide additional capacity. Reconfiguring each server individually is costly and time-consuming, hence the move towards software that can make these changes automatically.

Opsware, which was formerly Loudcloud has made a big leap forward with the Rendition deal, according to analyst Jasmine Noel of Ptak Noel & Associates.

This is Opsware recognizing that configuration and change management has to go beyond servers and software,” she says, noting that the deal adds network management to Opsware’s portfolio of products.

Rendition’s flagship offering is the TrueControl network automation product, which tracks and regulates changes across routers, switches, firewalls, and load balancers. But the deal is about more than just technology: Opsware has also got a foot in the door with Rendition’s customer base, which includes big hitters such as Microsoft Corp. (Nasdaq: MSFT), Nortel Networks Corp. (NYSE/Toronto: NT), the U.S. Department of Defense, and the National Security Agency.Last year Opsware stumped up $10 million for Cary, N.C.-based Tangram Enterprise Solutions, a vendor of IT asset management software. That deal expanded Opsware's user base by more than 200 customers (see Opsware Acquires Tangram).

The Sunnyvale, Calif., firm has also been winning customers of its own. Earlier this year, for example, Electronic Data Systems Corp. (EDS) signed a three-year, $50 million contract extension with the software vendor (see Opsware Renews EDS Contacts).

In the aftermath of the EDS & Tangram deals, Opsware has been touted as a possible acquisition target for IBM Corp. (NYSE: IBM), Hewlett-Packard Co. (NYSE: HPQ), or even Computer Associates International Inc. (CA) (NYSE: CA).

Ironically, some of these vendors are Opsware competitors, notably IBM with its Tivoli software and HP with its OpenView offering. Noel believes that anything is possible. “I can’t tell you who will buy whom,” said Noel. “But the infrastructure management market has to consolidate -- at the moment there’s 50 or so companies going after the same space.”

The market, though, was hardly overwhelmed by the Rendition deal. In trading today, Opsware shares fell 2 cents to $6.66.— James Rogers, Site Editor, Next-Gen Data Center Forum