Palo Alto Networks Purchases cloud security software assets from IBM As part of a broader partnership it will give the cybersecurity company access to more consultants and a larger client base.
In a joint press release, the companies said Palo Alto is acquiring QRadar cloud software from IBM for an undisclosed sum and moving existing customers to its security platform, Cortex Xsiam. This step typically takes one to three months, Palo Alto CEO Nikesh Arora told CNBC. IBM will also train more than 1,000 of its consulting staff on Palo Alto products.
Consolidation in the security software industry has intensified as companies brace for a range of attacks caused by artificial intelligence. in March, cisco It has completed its $28 billion acquisition of Splunk, the networking company's largest deal ever, acquiring the leading provider of security information and event management (SIEM) software.
Earlier on Wednesday, two more companies in the SIEM market, Exabeam and Thoma Bravo's LogRhythm, announced plans to merge.
Arora said his company needs to be better prepared to take on Splunk.
“It's clearly just a hotbed of activity in cybersecurity,” Arora said.
Palo Alto and IBM have been working closely together for months, and Arora said he has been talking with IBM CEO Arvind Krishna about how to strengthen their partnership. But they both sold SIEM software.
“We used to get stuck there,” Arora said.
The Splunk deal did not prompt IBM to make its arrangements with Palo Alto, Krishna said.
“I think we're not really competing with most of the things in Cisco's portfolio,” Krishna said.
In December, IBM said its consulting group would offer clients Palo Alto's competing Cortex Xsiam software. IBM will now adopt Cortex Xsiam, as well as Palo Alto's Prisma Sase 3.0 product suite. The Palo Alto company will integrate IBM's Watsonx large language models into Cortex Xsiam, in addition to using models from… Google.
The SIEM category has been around for more than 20 years, but the Palo Alto company just introduced Cortex Xsiam two years ago. It has gained rapid adoption, with bookings reaching more than $90 million last quarter, and Arora said the company has taken market share from “everyone.”
For IBM, a more robust set of contemporary security tools for consulting may help the company achieve its stated goal of mid-single digit revenue growth for 2024. In the first quarter, revenue increased 3%, with a 2% increase in the consulting segment .
Palo Alto is growing much faster than IBM. In the January quarter, revenue jumped 19%. The company will announce its fourth-quarter results on Monday.
Palo Alto more than doubled in value last year and its shares are up 6% year-to-date, bringing the company's market value to more than $100 billion. The stock rose more than 1% in extended trading. IBM shares have risen nearly 5% this year and are now worth $154 billion.
The deal should close by the end of September, subject to regulatory approval and other conditions, the companies said.
“I expect we will grow a significant consulting business on Palo Alto products, just as we did with Azure and AWS,” Krishna said in an interview. IBM helps organizations run their software on Amazon and Microsoft public clouds. He said he hopes to quickly generate new consulting revenues in the hundreds of millions of dollars.
IBM will continue to sell its QRadar software for use in on-premises data centers, Krishna said.
“It's been here for years,” he said.
At the same time, IBM will suggest customers who use it consider switching to Palo Alto's Cortex Xsiam, Krishna said.
