IBM project could lead to Irish acquisitions


12 Jul 2007

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Work conducted at IBM’s new Innovation Centre will not only have important implications for product development by Irish software companies but may also lead to potential outright acquisitions of Irish firms by Big Blue.

IBM hosts 38 Innovation Centres worldwide. The Dublin Innovation Centre will employ 10 people by the end of this year and judging by the growth of the UK Innovation Centre could end up employing 20 people, the director of the Centre Chris Howard told siliconrepublic.com.

He pointed to firms like Lotus, Tivoli and Filenet who all entered the IBM fold through initial joint-development work.

The IBM Innovation will have four different centres within it. These will include:

* The primary Innovation Centre for business partners and the local independent software vendor (ISV) partner community in Ireland;

* The European Venture Capital Centre which will help firms along through association with the IBM brand as well as access to technology platforms;

* A Technical Exploration Centre to leverage the research carried out; and,

* A Deep Computing Visualisation Lab, which uses IBM’s computing resources to test and analyse products, in other words ‘super computing on tap’.

Commenting on the Venture Capital Centre element, Howard said: “It’s very much about the technological enablement of a portfolio of companies being invested in by the European venture capital community.

“The idea is to help emerging firms gain credibility through association with the IBM brand, gain access to our sales teams, technology platforms and development environment and gain unique access to our patent library.

“In another sense it will function as our eyes and ears for disruptive new technologies that we need to be aware of that are innovative and cool and help us expand our partner ecosystem.

“In addition to this there’s always room for discussion around things like acquisition.”

Howard said that the initiative came about through a need for IBM to extend its portfolio out into the partner ecosystem and at the same time help young technology companies grow their business.

“We don’t invest our own funds in companies but we extend the resources and technologies that we can make available. The aim is to help get seed-level organisations off the ground from a technological perspective,” Howard said.

He pointed to two companies currently using the lab: Porto Media, a video rental service that allows people to download movies on to USB keys within 20 seconds from a kiosk; and Bianca Med, a firm that is fast becoming a world leader in speech technology and remote patient monitoring.

“They have the devices, we are providing the glue,” added Howard.

On the possibility that Irish companies working with the IBM lab may prove to be potential future acquisition targets of the company, Howard said it has happened before.

“None specifically in Ireland, yet, but in the last 18 months to two years a number of IBM acquisitions came about through building up and partnering with venture capital organisations.

“As we look to grow and extend our capability we will always be looking for complementary technologies. If we work with a firm to fill any technological gaps, build a good working relationship, there’s always the possibility that there will be an acquisition,” Howard said.

“This is a concrete step up the value chain for many Irish software firms,” a spokesperson for the Irish Software Association said. “Many of our start-up and entrepreneur members will now be able to plug into the expertise of IBM worldwide, as well as access European venture capital funding.

“This is exactly the kind of ‘network’ approach, where SMEs can interact with bigger players like IBM, that leads to innovation – the key to Ireland’s future economic success.”

By John Kennedy