Blue Washing of IBMs Recent Acquisitions Might Affect Licensing Deals

August 23, 2012

Lately, IBM seems to be on an analytics-buying spree having successfully completed three acquisitions spaced only a month apart. Its latest purchase is Tealeaf Technology, which is a company that focuses on customer behavior analysis and digital customer experience management. Prior that, it was Varicent, which specializes on sales performance and compensation. And before that was Vivisimo, a discovery and data-capture software provider.

But pre-acquisition customers may have a problem with this later on. “IBM’s “Blue Washing” Affects Customers Worldwide – Scott & Scott, LLP Alerts Customers of Potential Licensing Surprises” discusses why:

“…IBM’s recent acquisition of Tealeaf, Vivisimo, and Varicent will likely change existing license agreements with the newly acquired publishers.

There are a number of legal strategies that can be employed when IBM ‘blue washes’ its code and its license agreements. Blue washing is IBM’s term used when IBM releases updated code and changes its licensing metrics for products acquired from other publishers. Once customers upgrade to IBM’s product, it is often too late to negotiate and avoid hefty licensing charges associated with changed licensing metrics…”

Blue washing isn’t an ideal situation for companies who have been using business-critical software under terms that are advantageous to them. But what can they do against IBM? What negotiating power do small companies have versus the blue giant?

Changes in licensing deals by IBM wouldn’t surprise us here at Beyond Search. The only thing left for the affected companies to do is to absorb one of two costs: IBM’s more costly licensing metrics or shifting to other software.

Lauren Llamanzares, August 23, 2012

Sponsored by ArnoldIT.com, developer of Augmentext

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