Archive for July, 2012

Ada Developers Rejoice: IBM and Atego Play “Let’s Make a Deal”

For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get – Warren Buffet

We have a condo in the New Hampshire Mountains on a beautiful lake. The town of 2000 inhabitants swells to 12,000 in the summer – and every weekend brings forth a litany of “yard sales” and “flea markets”. It’s fun and instructive to see so many folks seeking “hidden treasure” out of what is another persons  “junk”.

Watching these events brings to mind how some embedded companies seek out such “treasure” by acquiring someone else’s problems. As Warren Buffet wrote, “given a lot of inside information and a million dollars, a company can go broke in a year”.

On occasion a deal gets put together that actually (surprise and shock) makes sense and is beneficial to all involved. In this case, IBM, Atego and, most important, Ada developers each come away with something special.

Atego has entered into an agreement with International Business Machines Corporation to acquire the IBM Rational Apex® Ada Developer product family, including the IBM Rational Apex integrated development environment.  Under the terms of the agreement, Atego will acquire the Rational Ada Developer product line, including all products and intellectual property.  The IBM development and support staff responsible for IBM Rational Ada Developer will join Atego. The acquisition will see all of the IBM Rational Ada Developer employees integrated into Atego’s global business operations.  Atego will rebrand the product family to’ Atego ApexAda Developer’ and the core IDE product ‘Rational Apex’ to ‘Atego Apex’.

Let’s take a closer look at the deal. IBM Rational has over the years made significant acquisitions in order to create a one-stop total design and operational capability to their customers. Going beyond their model-driven development (MDD) capabilities and integrating in quality controls, the Jazz worldwide cooperative development platform, as well as business metrics, and validation/verification and integrated change and requirements management solutions, Rational has uniquely positioned themselves for the high end, high gross margin business software market.

Ada solutions to IBM represent a small return on investment and a smaller revenue stream to the overall direction of the company.

Atego, however, has an MDD capability but is more focused on the embedded world across many verticals. For some of these markets, Ada use remains an important endeavor and developers that use Ada are better served by an organization that can better focus on their needs.

In a recent 2012 EMF survey of embedded developers, 8.6% of respondents indicated that they use Ada in their developments (a sizable market). 76% of these respondents indicated that they build on legacy code while 20% indicated that they bring forth legacy code. Interestingly, only 4% of respondents state that their new applications are NOT dependent on legacy Ada applications.

When asked what was the most important factors in making the decision to use Ada, 20% each replied “availability of open source objects” and “improved use of existing software” while 16% responded “easier integration of independently developed software components”.

This market intelligence data strongly supports the market potential for the Atego acquired technology. Remembering the opening Buffet quote, this is the “Value” that Atego acquired – although the “Price” was not mentioned.

Many embedded acquisitions are predicated on price – whereas strategic value is often overlooked.

In EMF’s opinion, every stake holder came out a winner. It’s nice to see that happen in this case.