Original URL: http://www.theregister.co.uk/2010/05/03/ibm_buys_cast_iron/

IBM shells out for Cast Iron

Integration appliances go cloudy

By Timothy Prickett Morgan

Posted in Financial News, 3rd May 2010 19:06 GMT

IBM has purchased Cast Iron System, an outfit that sells application integration appliances.

Everything is cloudy these days, and now, the appliances sold by Cast Iron will have that puffy label slapped on them after Big Blue shelled out an unknown amount of cash for the company.

Cast Iron was founded in 2001 as IronHide Corp., and its four private equity backers - Sequoia Capital, Norwest Venture Partners, Invesco Private Capital, and Tenaya Capital - have been waiting this payday for some time. Sequoia and Norwest kicked in $8.3m in first-round venture funding in June 2003 to help Cast Iron change its name and get its first product, the Application Router 1000 integration appliance, to market. At that time, Fred Meyer, who was chief strategy officer at Tibco, was brought in to be president and chief executive officer.

The AR1000 was a box that sits between other boxes, in this case allowing various incompatible applications to exchange data as they chew through transactions or exchange information with partner networks. In recent years, the Cast Iron appliances have been used to link in-house applications to hosted and SaaS applications such as NetSuite or Salesforce.com, and they're even being used to glue in-house applications with apps hosted out on cloud services such as Amazon's EC2 compute cloud.

In January 2004, Cast Iron pulled in another $12m in second-round funding, and in January 2006, it brought in Ram Gupta, a top exec from PeopleSoft, to be president and CEO. Ken Comee, who did stints at CollabNet, Parametric Technology, and Amdahl, was brought in to run field operations. Soon thereafter, the company announced its second generation product, the iA3000, and soon was experiencing triple-digit growth in product shipments.

In 2007, business was quadrupling and the company announced the iA2000, an entry integration appliance aimed at SMBs. Somewhere along the way, Comee was named CEO, and despite the economic meltdown in 2008, the company continues to grow and launch new appliances (the iA4000) and a cloud-based integration service.

In its most recent incarnation, Cast Iron's data integration and transformation software is called OmniConnect. You can buy OmniConnect and install it on your own boxes or buy it in an appliance form appropriately enough called the Cast Iron Integration Appliance (based on Dell x64 server iron). The integration and transformation software is also available as a service over the Internet as the Cast Iron Cloud 2 service. The products offer integration to Amazon EC2 and Microsoft Azure clouds right out of the box.

IBM already shelled out plenty of money over the years to get data integration and transformation software, most notably the $161m it paid to acquire DataMirror in June 2007. DataMirror sold high availability clustering software for IBM's AS/400 (now Power Systems i) midrange systems, but IBM never cared about that. What it wanted was DataMirror's Transformation Server, which provides some of the same functionality that Cast Iron offers in its software, appliances, and services.

IT vendors rarely say explicitly why they make acquisitions. Sure, they mumble a few hundred words, sprinkling buzzwords here and there or some data. In this case, IBM wanted to pitch Cast Iron as a cloud integration play and then said that it expected the "global cloud computing market" to expand from $47bn to $126bn, a compound annual growth rate of 28 percent, from 2008 through 2012.

What IBM did not say is that this growth is really due to more and more things being given the cloud computing label and that these numbers are nonsensical. IBM added that the deal expands its "industry-leading" business process and integration software portfolio, which grew more than 20 per cent in the first quarter of 2010.

It seems likely that IBM acquired Cast Iron as much to prevent it from falling into enemy hands as to get and make use of the technology. OmniConnect could be a better product than Transformation Server. Considering that OmniConnect is already in hardware appliances and implemented as a service, which Transformation Server, now part of the InfoSphere Information Server lineup, has not been as far as I know, this stands to reason. It might cost less money to buy Cast Iron than to port Transformation Server to appliances and put it on the IBM Cloud. (If this is true, someone at IBM should be fired. And for cause for once).

Cast Iron is going to be tucked up into the Information Management unit within Software Group, and IBM is taking all 75 employees of the company on board. ®