Your tech vendor's been gobbled up: Now what?
Brocade's acquisition of Foundry Networks took Foundry customer LINX by surprise.
The London Internet Exchange had been using Foundry's switches and routers for 10 years, and the vendor showed no signs of being an acquisition target or candidate.
"Those signs tend to be rather obvious," says LINX CEO John Souter. "They weren't necessarily showing those signs when the Brocade thing happened."
Souter and his colleagues at LINX went through a range of emotions when the news broke in July 2008 of Brocade's $3 billion offer. Especially since LINX didn't know a whole lot about Brocade.
"We're not users of SAN technology," Souter says. "We asked the people who were deploying the Brocade technology what they thought and generally got very encouraging noises. Since then ... we're really encouraged."
Souter's reactions are typical of a customer of a company being acquired. Users worry that their investments and assets might be stranded or neglected after their primary vendor is purchased, due to product streamlining, an exodus of expertise, strategic refocus, or all three.
After a lull in high-tech acquisitions during the recession, merger and acquisition activity has picked up again and some analysts predict that further big deals lie ahead. For customers, such large acquisitions can create worry and uncertainty, throwing into question future plans and the stability of projects underway.
Andrew Poodle is going through his second such situation. Poodle and his Craftspeed Web site development company use the MySQL database in its clients' projects. He was a MySQL user when Sun Microsystems bought MySQL in 2008, and it was déjà vu all over again for Poodle when Oracle bought Sun
"When the takeover was announced there was initially some worry and concern," Poodle says. "The transition itself has been relatively painless in terms of the interaction between customer and MySQL. We still talk to the same people who have the same knowledge and passion for a product they have helped develop. The day-to-day stuff hasn't changed, but I think that's not where the worries and concerns lie."
Oracle appears to be putting more emphasis on the enterprise version of MySQL than on the product's community edition, Poodle says. Resources available to community users are less apparent than they are to customers of the enterprise edition, he says.
Of more serious concern is the lack of life-cycle policy information for community users. "If you look at the life-cycle policy carefully, it promises the extended support for enterprise customers," Poodle says. "There is no mention of community."
He says users of the community edition had to haggle with Oracle to get the latest security patch for the software. "It took a lot of fighting," Poodle says. (Oracle did not respond to requests for comment by press time.)
Users who've experienced one of their primary vendors being acquired suggest being proactive in opening up the lines of communication with the acquiring company -- especially if the acquirer is unfamiliar.
This helped Techevolution, a New England-based IT consultancy and data center collocation company that went through Dell's acquisition of EqualLogic, to avoid any hiccups in the transition. EqualLogic supplies Techevolution's iSCSI storage arrays and Dell acquired the company in 2007 for $1.4 billion.
"We were worried -- you never know what's going to happen -- but it went very, very smooth from the transition of tech support to new equipment that we purchased from Dell," says Techevolution CEO Corey Tapper.
Techevolution ran a tech support "fire drill" shortly after Dell closed the EqualLogic deal by disabling a drive in one of its EqualLogic arrays. "Dell had the same [outage] response, if not faster," Tapper says.. "I thought that was really, really impressive."
He recommends users be proactive in learning as much about the acquiring company and its strategy as possible, while maintaining and even accelerating dialogue with the supplier being acquired.
"Some people buy equipment and never talk to their vendor again unless something breaks or they go and buy something five years later," Tapper says. "We were constantly talking to our vendors. Being prepared and knowing who the new parties are and getting acquainted with them is really important, because if you don't know them, one day you wake up and you're married to a new company. You don't know what the protocol is for the new company, and that could cause some grief."
LINX isn't grieving, thanks to open lines of communication with Brocade. Though there was some consternation around unfamiliarity with Brocade, uncertainty with the Foundry product road map and cultural differences between the companies, Souter says he's encouraged by the transaction.
"I think Brocade appears to have an absolutely ruthless dedication to quality that we certainly didn't see in the old Foundry company," Souter says. "The Brocade approach is just what we liked.
"The more you heard the Brocade-Foundry story ... just understanding how they were going to do that and whether they were going to respect this new market they were picking up through the acquisition, those were the key things," Souter says. "They are pretty good at communicating so our minds were at rest very quickly."
Read more about data center in Network World's Data Center section.