Top 10 technology acquisitions

Intel did its best to shake us all out of our summer lull on Thursday with the shock news that it was acquiring security firm McAfee. So here in the V3.co.uk offices, we've had a think back over other mergers and purchases that caused a stir in their time.

Our top 10 list isn't about which deals were the most expensive or controversial, but these are the ones that we think had the biggest impact on the technology landscape.

10. EMC VMware
Back in 2003, storage vendor EMC dug deep into its pockets and found a whole $635m (£409m) to purchase a five year-old company called VMware, operating in a little known area of technology dubbed virtualisation.

And what a deal that turned out to be. Thanks to the rapid uptake of virtualisation among corporates, especially at the server level, coupled with the more recent drive to be eco-friendly, VMware is now worth around $33bn (£21bn).

But things haven't always gone smoothly with the pairing. In 2007, EMC sold off 10 per cent of VMware shares. A year later former VMware chief executive Diane Greene was unceremoniously fired and replaced with ex-Microsoft veteran Paul Maritz, who was working for EMC at the time. At the same time, EMC lowered its 2008 revenue forecast for its virtualisation division.

The Maritz appointment has transpired as a good move. During its most recent financial quarter, VMware took a healthy $674m (£434m), a 48 per cent increase year on year.

9. Intel McAfee
This could go down in history as one of the worst acquisitions in living memory, or the most astute. Intel's $7.7bn (£4.9bn) cash purchase of McAfee, which is all but done and dusted, has bemused many commentators, with some fearing that the chip giant will manage the security firm as badly as it has other software vendors acquired in the past such as LANdesk.

On announcing the deal, Intel chief Paul Otellini stressed that "security will be more effective when enabled in hardware". He added that the acquisition opens up huge opportunities for the firm to co-sell McAfee's security products as well as deeply integrating them into its own.

But the jury is well and truly out on whether it can manage this. Intel talks a great deal about the need to secure the huge number of internet connected devices coming online every day, but neither McAfee nor Intel have an illustrious track record in mobile computing.

With new products expected from the two as early as the beginning of next year thanks to a previous partnership deal, we won't have to wait long to find out.

8. Oracle Peoplesoft
Not all acquisitions are friendly, and one of the most acrimonious examples in the tech industry was Oracle’s purchase of PeopleSoft.

It all started back in the summer of 2003. Oracle put in an initial $7bn (£4.5bn) bid for the CRM firm, which had itself acquired JD Edwards earlier that year.

That offer was rejected by the PeopleSoft board, and Oracle then carried on making higher and lower bids, all the while coming under the scrutiny of the US Department of Justice and the European Commission for possible anti-trust behaviour.

After an 18-month struggle, Oracle finally got its gal in early 2005, at a cost of $10.3bn (£6.63bn) and much bad feeling among its newly acquired employees. This wasn’t helped by Oracle’s decision to cut around 10 per cent of the workforce.

Five years on, Oracle is still selling standalone PeopleSoft applications. However, it will be interesting to see how the product set fits in with Oracle's long-awaited Fusion suite, due to be announced in September at this year's OpenWorld event.

7. HP Palm
The HP acquisition team rolled into action once again last April when it picked up Palm's webOS platform. Plunging revenues coupled with rave reviews of webOS had always meant Palm was ripe for the plucking, and it wasn't a huge shock to learn that 16 firms had entered the bidding war, no doubt all keen to get themselves a mobility platform.

Eventually HP won through, placing a cool $1.5bn (£966m) on the table to secure the deal.

HP will be keen to turn the purchase into products soon, but the world will have to wait a little while longer to see how HP plays its hand, after it pushed back the launch date of its first tablet running webOS to early next year.

Palm has been part of the Silicon Valley mergers merry-go-round before. Concentrate, now: founded in 1992 it was bought in 1995 by US Robotics, which itself was then bought by 3Com in 1997.

The firm then made Palm a publicly traded company in 2000, from which Palm set up a subsidiary called PalmSource in 2002 to develop and license its Palm OS system.

Still with us? Palmsource was then spun off as its own independent company and in 2003 merged with Handspring (the company the original Palm founders set up having become disillusioned with 3Com in 1998), and renamed palmOne.

Happily, though, in 2005 palmOne and Palm reunited - after much business dealing and trademark buying - to once again become Palm. Phew. At least now it's part of HP, we can forget all about that.

6. The business intelligence industry
This isn't just one acquisition, but a series of purchases that basically wiped out the business intelligence (BI) industry. During 2007, we saw firm evidence that BI acquistions are like buses.

March 2007 saw Oracle splash out $3.3bn (£2.12bn) for Hyperion, then we had a quiet few months before SAP stumped up $6.8bn (£4.38bn) for Business Objects in October. Not to be outdone by its enterprise software rivals, November saw IBM make a $5bn (£3.2bn) swoop for Cognos.

Fortunately for BI fans, all three product sets continue to be supported three years on from the mergers.

5. Lenovo IBM
At the end of 2004, IBM stunned the IT industry with the revelation that it was selling its PC division to Lenovo Group, which was then a relatively unknown company outside China.

Although the deal was relatively small when compared with some other takeovers, at approximately $1.75bn (£1.1bn), it had a huge impact because IBM was the company that invented the PC platform in the first place.

However, most observers thought the move was a good one for both parties; Lenovo at a stroke became the world's third largest PC supplier, while IBM divested itself of what had been an under-performing division and was able to focus instead on IT services.

Since the acquisition, Lenovo has continued with the highly successful ThinkPad laptop brand as well as the ThinkCentre desktops, and is now a familiar name in the business and consumer markets.

4. HP EDS
HP completed its $13.9bn (£8.95bn) acquisition of Electronic Data Systems (EDS) in 2008 as the firm attempted to boost its outsourcing division.

Although the move brought together two of the 'Big Six' players in outsourcing, it seems to have confirmed that HP lacks the Midas touch when it comes to getting the best out of acquired companies.

EDS employed 140,000 people in 64 countries and was ranked as one of the largest service companies on the Fortune 500 list with around 2,000 clients, prior to being taken over. Unfortunately for EDS employees, HP started swinging the axe quicker than George Osborne as it aimed to save $1.8bn (£1.15bn) through 'restructuring'.

Around 25,000 EDS employees received a P45 and any goodwill with remaining workers was lost when some EDS workers were told they would lose 30 per cent of their pay.

In an effort to start afresh, HP decided to ditch the EDS name at the end of last year, rebranding it as HP Enterprise Services. It remains to be seen whether this late integration of EDS can paper over the cracks that seem to have been present since day one of the acquisition.

It appears that HP may not have been in the strongest position to get the best out of EDS in the first place and any opportunity to achieve significant grow may never be realised.

3. AMD ATI
AMD's decision to consume graphics chip designer ATI not only represented a marriage of convenience, but common sense.

The two companies faced a common rival, Intel, in separate markets. Neither firm was big enough to compete against the unquestionable leader in processors, chipsets and graphics chips.

With the future heralding a closer relationship between CPU and GPU, AMD - often seen as the industry's underdog - needed GPU technology, fast.

The $5.4bn (£3.47bn) deal between AMD and ATI was announced in June 2006, and was closed by October 2006. Soon after, AMD announced Fusion, which it said would be the fruits of the merger.

Fusion will marry the CPU and GPU into a single package. Products based on Fusion are expected to be released in the second half of 2011, though AMD insiders have told V3.co.uk that the firm will showcase Fusion in January at CES 2011.

For AMD, the merger with ATI not only brought new technology but the security of a profitable business. In the years that followed, while AMD posted poor financial results, the GPU division, largely made up of ATI, saw financial success.

Even though AMD sold its manufacturing business, it is unlikely to give up ATI quite so easily. The next year should show us whether the merger has really worked out for two of the industry's most recognisable firms.

2. Sun and Oracle
Oracle's $7.4bn (£4.76bn) takeover of Sun Microsystems, which was completed in January of this year, has widely been seen as a sad end for the latter company, credited with creating the market for high-performance Risc-based Unix workstations back in the 1980s.

Oracle promised much from the acquisition, indicating it would create a synergy from its own enterprise software and Sun's high-end server and workstation hardware. However, things soon turned sour as Oracle laid off large numbers of Sun employees and stopped supporting projects such as OpenSolaris.

Oracle has recently signalled its intention to use its hardware and software expertise to build a complete, integrated datacentre technology stack for enterprise customers.

1. HP and Compaq
HP's merger with Compaq in 2002 was seen as one of the most significant moves of the decade at the time, costing HP $25bn (£16bn) and bringing together two of the biggest names in the computing industry.

However, while the merger led to HP becoming the top PC maker in the world, things did not go smoothly, with many HP shareholders and co-founder Walter Hewlett publicly opposing the merger.

Today, the Compaq name survives only on some HP laptops, but the Proliant server line is a legacy of the company, as was the iPaq line of PDAs and smartphones until recently.

Ironically, Compaq had itself swallowed up minicomputer maker DEC only four years earlier, a move that some blamed for Compaq's financial difficulties leading to the HP merger.