Altiris, BMC Bolster Management Wares with Acquisitions

by Timothy Prickett Morgan

Systems and application management software vendor Altiris has acquired Pedestal Software for $65 million in cash. By doing so, Altiris can now offer security management software on top of the substantial portfolio of systems management tools it offers directly and resells through Hewlett-Packard, Dell, and others. And right after that, BMC Software last week acquired OpenNetwork.

Only a few weeks ago, Altiris said it would be looking to make acquisitions to position itself as a more complete player in the enterprise space. Lindon, Utah-based Altiris is one of the many companies founded by The Canopy Group, the venture capital company created in late 1994 by Novell founder Ray Noorda. The addition of Pedestal Software comes on the heels of Altiris buying Tonic Software in January, Bridgewater Technologies in September 2004, and Wise Solutions in December 2003. While many of Altiris' rivals have been snapped up by BMC Software (which bought Marimba), Symantec (which bought On Technology), and HP (which bought Novadigm), Altiris has a market capitalization of around $670 million and would probably fetch more than $1 billion if someone tried to buy it. (Uh, HP. Now might be a good time, especially before Dell or IBM buys it.)

Altiris expects to close the acquisition by the end of March and will start integrating the Pedestal Software security products into its own line. Altiris said that the Pedestal security products would bring in between $17 million and $18 million in fiscal 2005 and would start adding to profits by the third fiscal quarter; the company added that the line would be profitable for the entire fiscal 2005 year, which suggests that Pedestal was on its way to hitting the mainstream. This would be why Altiris would pay more than 3.5 times sales to acquire the Pedestal. Altiris had $166.5 million in sales in 2004 and a net income of $16.7 million.

Right on the heels of the Altiris-Pedestal deal, systems management software maker BMC Software bought OpenNetwork, a vendor of single sign-on software that integrates Microsoft's Identity Management Server for the Windows platform with OS/400 security and sign-on software as well as for similar RACF environments on mainframes and sign-on products for Solaris and AIX. It is unclear what OpenNetwork's plans were for the Linux platform, but just like Novell's Linux-based ZENworks software can manage Windows servers and clients from a Linux server, it seems likely that OpenNetworks knew that it would need to be able to manage Linux machines from its Windows platform. With Linux being the fastest growing server platform (and within a few years, perhaps the only growing platform), if you don't have a Linux strategy, well maybe you don't have a growth strategy. One quick way to get a Linux strategy was to be acquired by BMC.

BMC, which sells various PATROL system management utilities for many platforms, paid $18 million in cash for OpenNetwork. The company's products will be merged into BMC's Identity Management business unit, which will also pick up 40 of OpenNetwork's employees under the deal. BMC has a whole set of Unix system tools that have been ported over to Linux, and now it will probably be working on a native Linux identity management solution. That's a guess, not back channel communication from BMC or OpenNetwork. But it is a very good guess.