Score=95% - IBM Acquires Small Business Specialist - Net Integration Technologies

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Last Friday, January 18, 2008, IBM announced the acquisition of Net Integration Technologies, the Markham Ontario integrator and small business specialist.

This deal solves a big issue for Lotus. How to break out of the large enterprise market and address small medium business needs?

Brockmann rating on this deal is as follows:

Strategic fit [5/5]. Net Integration Technologies is a small company (probably about 50 employees), but according to one IBMer involved in the transaction that I spoke to this week at Lotusphere, they are fiercely passionate about competing against Microsoft and competing well. There are no other IBM solution for addressing the small business and the offering is impressive.

Timing [5/5]. This move positions IBM into a large market never before addressed, and therefore positions them to gain share. Timing-wise, today is a better day than any other. I would expect that IBM ought to be able to deliver 10 x more revenue than NITIX had expected, as a result of putting their sales and marketing prowess into the game.

Customer demand [5/5]. Appliances are the correct package for small business. Lotus offers a compelling differentiation against the Microsoft offering. Lotus direct advertising will be important to presenting Lotus as a viable brand option. Channel recruitment will be important to facilitating this market development.

Potential [4/5]. Brockmann & Company estimates that this deal will accelerate Lotus' growth in the coming years. Although with a product introduction due by the middle of 2008, it will be difficult for IBM to achieve more than $100 million in sales in 2008, I would expect that it is possible to deliver that kind of revenue by year end 2009.*

Overall: 19/20 = 95%. 

* Note: Brockmann and Company do not forecast market sizing.

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