The Good, The Bad, and The Questionable: Acquisition Activities

Sometimes I read the headlines when a company gets acquired and think to myself, “Wow, that was a great move!” Other times I can’t really speak after reading because I’m shaking my head too much about what I see to really make any kind of judgement. With that being said, I think it’s time to look at three recent acquisitions through the lens of everyone’s favorite spaghetti western.

The Good – Palo Networks Alto Buys Twistlock: This one was kind of a no-brainer to me. If you want to stay relevant in the infrastructure security space you’re going to need to have some kind of visibility into containers. If you want to stay solvent after The Cloud destroys all infrastructure spending forevermore, you’re going to need to learn how to look into containers. And when you’re ready and waiting for the collapse of the cloud, containers are probably still going to be relevant.

Joking aside, this is a great move for Palo Alto Networks. They’re getting a lot of container talent and can start looking at all kinds of ways to integrate that into their solution sets. It lets people in the organization justify the spend they have for security solutions by allowing them to work alongside the new constructs that the DevOps visionaries are using this week.

By the way, you can check out more about Palo Alto Networks June 19th at Security Field Day 2

The Bad – HPE Buys Cray?: Hands up if you were waiting for Cray to get purchased. Um, okay. Hands up if you thought Cray was actually still in business? Wow. No hands. Hmmm…

HPE has a love affair with HPC. And not just because they share a lot of letters in their acronyms. HPE has wanted to prove it has the biggest, baddest CPUs on the block. From all their press about The Machine to all the work they’ve done to build huge compute platforms, it is very clear that HPE thinks the future of HPC involves building big things. And who has the best reputation for having amazingly awesome supercomputers?

Here’s my issue with this purchase: Why does HPE think that the future of compute lies outside the cloud? Are they secretly hoping to build a supercomputer cluster and offer it for rent via a cloud service? Or are they realizing they have no hope of catching up in the cloud race and they’re just conceding that they need to position themselves in a niche market to drive revenue from the kinds of customers that can’t use the cloud for whatever reason? There isn’t a lot of room for buggy whip manufacturers any more, but I guess if you make the best one of the lot you win by default.

Given the HPE track record of questionable acquisitions (Aruba aside), I’m really taking a wait-and-see approach to this. I’d rather it be an Aruba success and not an Autonomy debacle.

The Questionable – NXP Buys Marvell Wi-Fi: This one was the head scratcher of the bunch for me. Why is this making headlines now? Well, in part because NXP is scrambling to fill out their portfolio. As mentioned in the linked article, NXP had been resting on their laurels a bit in hopes that the pending Qualcomm acquisition from last year would give them access to the pieces they needed to move into new markets like industrial and communications infrastructure.

Alas, the Qualcomm deal fell apart for political reasons. Which means people are picking up the pieces. And NXP is getting one of the pieces their desperately needed for just shy of $2 billion. But what’s the roadmap? Sure, Marvell has a lot of customers already that use their wireless and Bluetooth chipsets in a wide range of devices. But you don’t make a acquisition like that just for an existing customer base. You need synergy. You need expansion. You need to boost revenues across both companies to justify paying a huge price. So where’s the additional market going to come from? Are they going to double down on industrial and automotive connectivity? Or are they thinking about different expansion plans?

Tom’s Take

Acquisitions in the tech sector are no different from blockbuster trades in the sports world. Sometimes you cheer about a big pickup for a team and other times you boo at the crazy decisions that otherwise sane people made. But if you follow things closely enough you can usually work out which people are crazy like a fox as opposed to just plain crazy.