IBM Considers Red Bend

IBM is in advanced talks to acquire Israeli software company Red Bend for US$250mn. Neither company has confirmed the talks but IBM's long history of acquisitions in Israel suggests this acquisition is likely. Red Bend's technology enables mobile device software and firmware updates to be completed remotely, an area that is likely to continue growing. As more and more of the world's subscribers go mobile, BMI believes the acquisition, if confirmed, would be beneficial to IBM's strategy.

Mobile Growth Attracts IBM
Global Mobile Forecasts (mn)

Local news reports this would be IBM's 12th acquisition in Israel and the synergies between the companies suggest it is a good fit, with Red Bend's technology integrated into IBM's PureSystems service, according to Red Bend works with several of the largest mobile operators in the world including US operators Verizon, AT&T, Sprint, T-Mobile and Japanese operators NTT docomo and Softbank among others. The company also counts major OEMs such as Samsung and Lenovo and components manufacturers such as Qualcomm and Texas Instruments among its customers.

The acquisition would put IBM in a strong position in the mobile market, where Red Bend-enabled devices number 1.6bn, around a quarter of all global mobile devices. As BMI forecasts, the number of mobile subscriptions will continue to rise, providing plenty of opportunity for growth. Many of the devices that Red Bend highlights its products are used in are smartphones, the fastest growing area of the mobile market. As more consumers in emerging markets are able to acquire smartphones, the potential market for Red Bend's mobile software management products is vast. Their integration with IBM's existing product line means the acquisition would be a good strategic move for IBM.

IBM's strategy saw it acquire Worklight, a mobile enterprise application platform, in January 2012. This builds on the overarching trend to focus on mobile services as emerging market consumers will increasingly use mobile-only connections for their IT needs.

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Geography: Israel, United States

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