The global M&A outlook for 2013 as a whole appears uncertain. Remark and mergermarket's "Doing the Deal" study shows less than 50% of Europe's leading dealmakers expect a rise in M&A activity over the coming 12 months, with lingering uncertainty and lack of confidence as a result of austerity measures on the agenda of most European governments.

However, there are some positive signs that technology M&A in 2013 will continue to outperform the wider market. It is likely that technology M&A in the first half of 2013 will continue to be driven by those same factors which drove activity in the latter stages of 2012, principally (i) big data, (ii) cloud computing, (iii) smart mobility and (iv) social networking.

The third of these 4 short articles focuses on Cloud Computing, looking back at some of the deals from 2012 and potential activity for the coming 12 months.

Trend #3: Cloud Computing

Our first two articles concentrated on the recent explosion in the production of big data, and the proliferation of smart devices across both consumer and business sectors.  Whilst cloud computing is not a new concept, the potential for innovation in cloud technologies in 2013 and M&A activity will be driven by this surge in demand for reliable, secure, high speed and resilient mobile networks and infrastructure. Recent research by GigaOM expects the cloud market will grow from $70.1 billion in 2012 to $158.8 billion in 2014.   The opportunities for M&A, from strategic partnerships to acquisitions, will lie at all levels within both existing cloud architectures (from new breed energy efficient data centers and colocation centers to innovative software and platform service providers) and also the emergence of new cloud architectures which facilitate the growth of a federated multi-cloud.  Opportunites should also continue to arise as organisations look to take advantage of differing deployment models, both public and private.

Public cloud

Apple's iCloud is a well known public cloud, enabling its customers to store music, photos, video and apps within a cloud environment. Lenovo's acquisition of Stoneware in September 2012 is a good example of how the surge in smart mobility is leading to increased M&A in the cloud sector. The acquisition of Stoneware's technology, which allows the synchronisation of data across multiple devices, enables Lenovo to build an own-brand alternative to iCloud in its bid to keep pace with Apple and Samsung in the smartphones and tablets market. It is also interesting to note that Lenovo had been in partnership to re-sell Stoneware's software for the two years prior to the acquisition, during which time, according to Bloomberg, the company's revenue doubled. Whether through strategic partnerships or bolt-on acquisitions, the move towards more public cloud offerings should see increased M&A activity.

Private Cloud

Whilst growth in public cloud deployment should be expected, private cloud models are expected to outpace public and hybrid services, driven by the need for businesses' to deliver mobile products and services to customers in a secure manner. As opposed to public cloud, private cloud involves the operation of cloud infrastructure solely for a single organisation, and notwithstanding private cloud is vulnerable to its own security risks, it is perceived as safer than public cloud. 2012 saw the launch by Barclays of its mobile app Pingit, a mobile app available on the Apple, Android and Blackberry operating systems which enables smart phone users to make free payments to other UK mobile users directly. The app is underpinned by a private cloud, which also enables it to provide its Mobile Banking app. It has recently been suggested by The Sunday Times that Barclays use of its private cloud has enabled the bank to cut its total IT costs by 90 per cent, saving the bank billions of pounds.

Rackspace's tie-up with Redapt in 2012 is a good example of strategic partnering to deliver private cloud solutions, the partnership enabling the two companies to deliver Rackspace Cloud: Private Edition as a complete infrastructure and support solution to clients needing the consumption model of cloud but the control of private hardware.

Other private cloud M&A plays in the last quarter of 2012 included Dell's acquisition of infrastructure automation specialist GaleForce, and Red Hat's acquisition of ManageIQ for $104 million, a company providing enterprise cloud management and automation products that enable businesses to deploy, manage and optimise their private clouds and virtualized infrastructure.

Datacenters & networking

Datacenters and networks underpin the cloud, whether in isolation or through a federated intercloud model. The potential for M&A activity lies around the datacenter and network providers themselves, to the companies which provide transformative technologies to those datcenters.

The demand for resilient and highly efficient datacenters increases in line with the proliferation in the amount of data, increased connectivity, and more than perhaps anything else: the consumer demand for instantaneous access and continuous uptime. Companies providing innovative datacenter infrastructure management solutions could become targets, such as Cisco's acquisition of Cloupia in December 2012 for $125million, whose technology enables datacenters to simplify the deployment and configuration of physical and virtual resources from a single management console.

The use of virtualisation (technology which allows servers and storage devices to be shared) to improve scalability and hardware utilisation, continues to disrupt the cloud datacenter and network market. Cisco's acquisition of Virtuata in July 2012 is a notable example, as is VMWare's acquisition of startup Nicira for $1.26 billion, a company whose technology enables the efficient distribution of data over its network and infrastructure.

There are also some good examples of consolidation in the UK managed data and cloud hosting service provider market, which is likely to see further M&A activity in 2013 as businesses look to expand market shares and competitive edge through further bolt-on acquisitions. A good example is 6 Degrees, a startup backed by Penta Capital which recently won 'Young Company of the Year' at the Growing Business Awards 2012, which has been on the acquisition spree of late, recently acquiring Datahop, a fibre optic high speed ring network provider.

Software and Platform Providers

In our previous article on smart mobility we mentioned that more and more organisations are transitioning towards a "Bring Your Own Device" IT strategy, enabling their employees to use their own smart phones, iPhones and laptops for work related purposes. This in turn is increasing M&A activity within the SaaS and PaaS cloud environment. Citrix' acquisition of Beetil in September 2012 enabled Citrix to bolt on a cloud-based integrated IT service desk solution for its cloud-based "GoToAssist" IT software tool. Shortly following the acquisition, Citrix announced that it had acquired Beetil "to address the growing IT demand to support mobile devices and BYOD".

As the adoption of cloud computing advances it is likely the disruption will come from the start-up community and the leading systems vendors will look to strategically partnership with or acquire those companies who are able to provide the right solutions to the real issues facing cloud computing.

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