HP to buy Opsware for $1.6 billion

By Kevin Komiega

—Hewlett-Packard this week announced that it has inked a deal to acquire data-center automation software vendor Opsware for $1.6 billion, the third-largest acquisition in HP's history behind only Compaq Computer and last year's purchase of Mercury Interactive.

Opsware's flagship offering is the Opsware System, a software suite that automates management tasks such as server and network configuration, discovery, deployment, provisioning, and patching. Opsware's attempt to tackle automated storage management, however, is still in its infancy, leading some to speculate that HP will integrate its own storage technology with the Opsware System.

Opsware CEO and co-founder Ben Horowitz says storage is definitely part of the problem the company has been trying to solve. "We view storage technology as part of an integrated problem. You can't make a change in a modern data center on a server without understanding what is happening on the storage end of things and what's going on in the network," he says. However, Horowitz admits, HP has more expertise when it comes to storage management.

"HP has a lot of technology that goes beyond what we've done in the area of storage. So we look forward to working with HP's team to deliver not only the best server and network technology, but also the best storage solution—all integrated," Horowitz says.

Opsware threw its hat in the storage ring last year when the company acquired storage resource management (SRM) vendor Creekpath Systems for $10 million. Opsware's plan was to use the agent-less Creekpath software—which performs discovery and topology mapping operations, analyzes utilization rates, and monitors data access patterns—to create a new storage automation product called the Opsware Application Storage Automation System, which has yet to be officially announced.

"The Creekpath software is probably a complete overlap with the AppIQ technology, which HP sells as Storage Essentials. Opsware's storage technology doesn't come close to the functionality of Storage Essentials," says Stephanie Balaouras, a senior analyst at Forrester Research.

Balaouras says Storage Essentials is already considered "best-of-breed" SRM software and, given that HP has already integrated Storage Essentials with other HP management platforms, such as Systems Insight Manager, she would not be surprised if the Creekpath technology is shelved.

Tom Hogan, senior vice president of software at HP, says there is very little overlap between the HP and Opsware product portfolios, and that storage is a key component of the company's data-center automation strategy. "At a macro level, we all see the explosion in digitized content and a lot of that is unstructured, which is fueling growth in the storage infrastructure," says Hogan. "The ability to reduce the complexity and manage the inevitable and unforeseeable is important. We don't see the growth trajectory of storage slowing down and we're committed to helping customers get their arms around that."

According to Hogan, the acquisition of Opsware is intended to extend HP's software capabilities to automate the data center from initial provisioning of servers, networks, and storage devices to managing ongoing changes and compliance requirements with integrated process automation.

It remains to be seen how HP plans to build out the storage component of Opsware System.

Following the close of the transaction, Opsware will become part of HP's software business unit. The acquisition will be conducted by means of a tender offer for all of the outstanding shares of Opsware and is expected to close around October.

This article was originally published on July 25, 2007