The merger of Actional and Westbridge, announced today, signals that we have now entered a strong phase of early-stage consolidation among web services infrastructure vendors. This is different from what I would dismiss as the 'phantom' consolidation phase we saw last summer, when HP and CA each bought a couple of also-rans, which I would say was more a case of larger vendors floundering around, trying to buy some cheap tickets to get on board on what they could see was an emerging bandwagon.
What we're seeing now is a more substantive consolidation phase, which kicked off earlier this month with Digital Evolution buying Flamenco Networks. I would describe this as the 'acceleration' phase. It comes as a result of vendors having gained some experience in the market, which has given them a better feel for the full scope of requirements that customers are seeking to fulfil. They are now teaming up to fill in gaps that they'd previously left open while experimenting with various untested offerings, in preparation for rapid growth in demand for proven products.
We're still some way short of what I would call the 'endgame' phase of consolidation, in which companies buy each other in order to secure a larger footprint in the market. That's when the big vendors finally step in CA's recently-announced acquisition of Netegrity is a good example of this form of consolidation in the ID management sector and the sums changing hands are measured in hundreds of millions of dollars, which is more than enough to leave the original venture investors feeling well pleased with themselves.
On that note, it's interesting that the merger and accompanying funding round has been an 'up' round for Westbridge but not for Actional. It turns out that the smart early money has been placed on security (or rather what I prefer to term 'XML routing') rather than monitoring and management. I wouldn't be surprised to see companies like Vordel, Reactivity and Forum Systems getting caught up in similar transactions in the next six months or so.
I won't say more about this merger for now, as we'll be publishing a more detailed article mid-week, looking at what else it tells us about the SOA management sector. So watch this space for more analysis and insight later this week.