Iona buys open-source SOA company

Iona Technologies PLC has acquired open-source software company LogicBlaze Inc., its second acquisition in as many months to help grow its SOA business.

LogicBlaze offers a stack of SOA (service oriented architecture) software that combines several open-source components, including the Apache ActiveMQ messaging system and the Apache ServiceMix ESB (enterprise service bus). Called Fuse, the stack was rolled out early last year.

The acquisition brings Iona more expertise to offer its customers doing SOA projects using open-source software. Among the employees joining Iona are LogicBlaze co-founders Hiram Chirino, Rob Davies and James Strachan, all of whom are heavily involved in the development of ActiveMQ and ServiceMix.

The fate of the Fuse software stack is uncertain, however. Iona appeared to have made the acquisition, which was announced Tuesday, more for the expertise than for the software.

"Fuse is a very large stack of a bunch of different open-source products. We've typically not been in the business of providing a large stack of software," said Larry Alston, Iona's vice president of corporate strategy and product management.

Iona is more likely to offer the various Fuse components separately, although it will try to ensure "continuity" for LogicBlaze's customers, of which there are 20, Alston said.

"If it turns out it's not a product we think we can support long term, we won't," he said.

LogicBlaze, in Marina del Rey, California, had nine employees, all of whom will join Iona, Alston said. Terms of the cash deal were not disclosed. Iona said it acquired most of the assets of LogicBlaze, including technology, intellectual property and customers.

One analyst said the acquisition was probably a "fire sale."

"When a company acquires another company's assets [and not the company as a whole, including its liabilities], you know that the company being acquired was struggling," said Ron Schmelzer, a senior analyst at ZapThink LLC. "From a technology perspective, they had some good stuff that will add to IONA's open-source offerings. But as a company, LogicBlaze never really got that far," he said.

Iona was best known in the past for its Orbix CORBA products, used by telecommunications companies and banks to route phone calls and financial transactions. Sales of those products have been declining, however, and Iona began to reinvent itself a few years ago as a provider of SOA products.

Its challenge has been to grow its SOA revenue faster than its Orbix business declines. It reported revenue of US$22.8 million for the fourth quarter of 2006, up from $19.1 million the year before. Net income was $2.9 million, up from $960,000. For the first quarter this year it issued a profit warning, however, saying some deals didn't close on time.

"We see this as an important new revenue stream for Iona," Alston said of the acquisition. "The whole idea is to accelerate our ability to create new revenue."

Its main product for SOAs is the Artix Infrastructure Suite. Some of the components in LogicBlaze's Fuse stack, including ActiveMQ, are offered as part of Artix, Alston said. The new employees will help to train Iona's staff and give them more expertise in those products, with the goal of providing better service for Artix customers.

On March 6 Iona bought C24, another privately held company, bringing additional data management capabilities to Artix.

Vendors often hire prominent open-source developers, or buy their companies, to gain expertise in their software. Before it was acquired by Red Hat Inc., JBoss hired Gavin King, the creator of Hibernate, as well as lead developers of the Tomcat, JavaGroups and Nukes projects.

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