IBM Buys Integration Appliance Maker Cast Iron
May 10, 2010 Timothy Prickett Morgan
Cloud, cloud, cloud. If you say it a hundred more times, will that make a product any more interesting or useful? No. But vendors, journalists, analysts, and other IT observers are addicted to the word cloud, so every move or product a vendor makes has to be cloudy, even if it really isn’t. Or even if cloud is just the fulfillment of the promise of flexible distributed computing Unix and then X64 server vendors sold us two decades ago. And so it is with IBM‘s acquisition of Cast Iron Systems last week.
Cast Iron is a venture-backed, privately held company based in Mountain View, California, that was founded in 2001 as IronHide by Nikhyl Singhal, who was the original company’s executive vice president of products, and George Scott, its chief technology officer. In June 2003, as the company raised $8.3 million in first-round venture funding from Sequoia Capital and Norwest Venture Partners, an outsider named Fred Meyer was brought in to run the renamed company as it shipped its first product, the Application Router 1000, which as the name suggests was a data integration platform for hooking multiple and incompatible systems, databases, and applications together. Six months later, when the idea of a data integration appliance looked like a hot one, Sequoia and Norwest shook the can a bit and Invesco Private Capital and Tenaya Capital worked with Cast Iron’s original two investors to put $12 million more into the company. And this time, yet another CEO was brought in, Ram Gupta of PeopleSoft. The company started small, but was tripling shipments by 2006 and quadrupling in 2007 when the kicker iA2000 appliance was announced. In 2008, despite the economy being on the fritz, Cast Iron kept growing and put a next-generation product into the field, the iA4000, and launched a cloud-based service for data integration, called the Cloud 2 service. The company also launched a free-standing version of its data integration product, called OmniConnect.
All three Cast Iron products–the iA4000 appliances, the OmniConnect software, and the Cloud 2 service–can link to online applications, such as those from Salesforce.com and NetSuite, as well as to applications running on public clouds, such as Amazon‘s EC2 and Microsoft‘s Azure.
IBM knows a thing or two about data integration, and the wonder is why it has not paired software and hardware together to make its own data integration appliances. (It has started making WebSphere appliances recently.)
In April 2005, IBM paid $1.1 billion to acquire the Ascential Software data integration business that was spun out from Informix after IBM bought that for $1 billion four years earlier. And in July 2007, IBM paid $161 million to buy DataMirror, a maker of the iCluster high availability clustering and Transformation Server data integration products. These Ascential and Transformation Server products were mished and mashed about to make up IBM’s InfoSphere product line. The point is, IBM has plenty of expertise in data integration, and it knows how to make appliances.
What IBM didn’t say in its announcement of the Cast Iron acquisition, and what it surely doesn’t want to happen, is for one of its competitors–such as Oracle or Hewlett-Packard–to get such expertise. The fluffy cloud marketing is just a kind of misdirection. The truth is that by making data integration between legacy and new systems easier, the odds that those legacy systems just sit there, paying Big Blue money every month and year, go way up. And IBM wants the money to do the integration, whether it is done onsite through an appliance, or over a secure private network through an online service. Moreover, while the Ascential and DataMirror products did transformations between databases, the Cast Iron appliances link at the application layer.
IBM did not divulge how much it paid for Cast Iron. The company’s 75 employees are going to join Big Blue, and presumably its products will be folded into the Information Management division of Software Group.