What do you know, Mercury Interactive, a testing tool company announced it was buying SOA vendor Systinet for a $105 million. Good for Systinet, first of all. I've been watching and working with that company for the last few years and I think they are both smart guys and have good technology. Moreover, they are making good traction in both government and commercial sectors and SOA begins to take root.

I would say the elevator ride description of Systinet is that they provide key discovery and governance tools for those building SOAs. Their UDDI-based directory system is designed for the enterprise, and allows many desperate systems to both discover and leverage remote services, as well as control access to insure you’re dealing with healthy and validated services. A clear need for almost all SOAs, and a good position in the marketplace that is just now emerging, with the focus on the "just now emerging" thing, we'll get to that below.

Mercury, which makes a suite of tools for testing and monitoring business applications, said the acquisition will better position the company in the emerging market for SOA infrastructure and tools. This provides them with a good grab into the SOA space, something they have not done thus far. The purchase of Systinet will buy them entry into the exclusive SOA club, which evidently is increasing in value daily.

This acquisition, along with IBM's acquisition of XML appliance supplier Datapower last Fall, clearly points to consolidation occurring within the Web services and SOA space. While this is natural in any market, this consolidation is occurring before the SOA space has really emerged. Thus, at least in the eyes of the big guys this is a huge market down the road, and it's okay to justify buying companies at huge multiples in order to gain market share. They are not waiting for the market to emerge and then decline, they are preparing for a long and profitable ride and are paying a premium for the choice goods.

Count on more of this occurring in the short term. By the way, I can be reached here. :-)

Posted by Dave Linthicum on January 10, 2006 06:13 AM