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10/21/2003
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Open Text To Acquire IXOS As Content-Management Consolidation Continues

The $250 million deal continues the recent combination of collaboration and content-management vendors.

The consolidation frenzy in the content-management market continued Tuesday when Canadian collaboration and knowledge-management vendor Open Text Corp. said it would acquire IXOS Software AG, a German supplier of document-imaging and content-archiving software, in a complex deal valued at about $250 million.

The combination of collaboration and content management has become a familiar theme over the past couple of years as vendors in both areas look to secure their futures by forming larger companies. The consolidation wave took on larger proportions last week when Documentum Inc., which had been the biggest independent content-management vendor, agreed to be acquired by storage vendor EMC Corp. for about $1.7 billion.

The move to buy IXOS was necessitated by the evolving marketplace, says David Glazer, Open Text's VP of product management. Enterprise content management has evolved to become an essential software infrastructure component, he says, meaning that companies are reluctant to rely on smaller vendors for something that's becoming an ever-growing enterprise priority. "When you hit that inflection point, the structure of the market needs to change," he says. Additionally, Open Text had begun to veer toward content management under pressure from customers, causing it to recently acquire a smaller content-management supplier, Gauss Interprise AG, which will be folded into IXOS to form Open Text's European content-management division.

Open Text execs insist that the acquisition of IXOS brings together two companies that complement each other. "Our product lines are adjacent to each other," Glazer says. "We solve related problems with almost no overlap."

But Connie Moore, a VP at Forrester Research, says there's overlap between IXOS and Gauss, as well as other smaller acquisitions Open Text has made. The move is a good one for Open Text because of its need to obtain more critical mass in order to remain viable, but the company will have some tough decisions to make, Moore says. "They're going to have to pick which products are strategic and which ones will be taken to end of life." As a result, she says, Open Text customers should ask hard questions about the company's product road map.

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