PacketTrap Networks, which specializes in monitoring software for managed service providers, has been acquired, MSPmentor has learned. News of the deal surfaces only a few hours after chatter started about a possible ConnectWise-CharTec business relationship. Here’s some quick information about PacketTrap’s buyer. Plus, a look at the MSP software industry’s changing competitive landscape.
So who acquired PacketTrap? The answer: Quest Software, which specializes in “smart systems management.” Also of note: Quest Software owns ScriptLogic, which makes Windows desktop, server and Active Directory management tools. It’s safe to expect Quest to connect the dots between ScriptLogic and PacketTrap, in a bid to compete more aggressively against Kaseya, N-able and other RMM tools, sources say.
PacketTrap’s web site is already updated with the following graphic:
According to Mike Byrne, director of partner management at PacketTrap Networks:
“We’ll (PacketTrap) be a stand alone business inside one of the world’s strongest IT infrastructure software brands. We now have millions and millions of dollars behind us to build a world class set of solutions to meet both our partners and customers needs.
We’re committed now more than ever in delivering to both the MSP, and IT Community easy to use and deploy, yet robust alternatives to the more complex and costly other products out there. This is an extremely exciting time for PacketTrap and our partners and customers!”
Who Does What?
Now for a closer look at each company involved in the deal. According to PacketTrap’s general company description:
With over 80,000 corporate users in more than 100 countries, PacketTrap provides affordable enterprise class network and application management software that improves performance across our customer’s most complex networks. PacketTrap’s flagship solution, PacketTrap MSP, provides IT professionals with a 360 degree view of their customer’s single and multi-site networks and allows them to manage and maintain their infrastructure from a single interface.
And who is Quest Software? The answer: A pretty big systems management company that’s pushing hard into SaaS. For its first nine months of 2009, Quest’s revenues were $500 million — far larger than most software companies that currently compete in the MSP RMM (remote monitoring and management) market.
Quest Software has been aggressively promoting SaaS-oriented management solutions. The company’s Quest OnDemand will be hosted on Windows Azure — the Microsoft Windows cloud — according to a Nov. 17 press release.
Next Moves
I’m leaping ahead a bit here, but I believe we’re seeing the start of (A) MSP industry software consolidation and (B) a potential realignment of who competes with whom in the MSP software space.
Generally speaking, the MSP software industry is highly fragmented and the economic picture is somewhat improved from early 2009. I think that sets the stage for consolidation and coopetition, and more investor dollars flowing into service providers.
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Posted In: Mergers & Acquisions | Platforms | RMM | Software as a Service and Hardware as a Service
Tags: Managed Services Acquisition | MSP Industry Consolidation | PacketTrap Acquired | Quest Software PacketTrap
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Congrats and good luck to both Quest and PacketTrap!
Great reporting Joe…
Vlad has been saying it for a year, and we’re finally seeing it: Consolidation.
In 12 months, this industry will look nothing like it does now.
Do you think so – I am wondering if we are over-thinking the consolidation scenario?
Why do we believe that consolidation will occur?
Gary:
A few thoughts…
1. Credit crunch is easing. Deal makers ready to open wallets?
2. MSP software industry is highly fragmented
3. Not all MSP software companies are doing well, though, which will force some executives to consider strategic moves for their companies
4. Some MSP software companies have investors who might be getting itchy. 2008-2009 were about closely managing costs for survival or responsible growth. Assuming the global economic storm is easing/ending (is it?), now might be the time for companies to go shopping
5. Some software/IT companies are sitting on mounds of cash…
Readers: Agree? Disagree? To Gary’s point — is MSPmentor and some of its readers over-thinking the consolidation scenario?
-jp
Joe-
I think you’re right on.
A lot of the software vendors in our space (I assume you’re using MSP software to mean RMM, PSA, etc.) operate in a vacuum – they’re each an island on their own. The company/companies that start bringing things together will definitely come out on top.
I do think the economy is turning around, but we’re definitely not out of the woods. But for those companies with a pile of cash (ConnectWise) or access to capital (Autotask), everything is still on sale at low, low prices.
It would be the ideal time to snatch up a few smaller companies and start building a portfolio of tightly (and, perhaps, exclusively?) integrated applications.
Tom
I disagree. With all due respect, I think there are more pieces to this equation that are being considered in these comments.
If it was only about economics, availability of funds, and market disaray needing to be rationalized, then I would say the forces are lined up for consolidation. But there are other forces pushing in the opposite direction. For example the push to the cloud is raising significant uncertainty about the future role of RMM. On another front, there are essentially no barriers to entry for companies that want to get into the IT services business. Accounting firms, law firms, marketing agencies (and the list goes on) are getting into the IT services business and are creating many IT service specialty niches – not to mention the many technician/entrepreneurs that have decided they don’t want to play the big company game and are starting their own IT services business. Just to name a few….
Much more could be said here, but I contend that there are as many, if not more, forces pushing in the opposite direction of consolidation. I do think we will see of bunch of consolidation moves in 2010, but in the grand scheme of things, it will be a small part of the overall ecosystem. [just another 2 cents to consider...].
I would suggest not to read much into any of this. Quest is a large company that has a history of building their business through aquisition. While PacketTrap has a strong MSP business, they seem to have an even stronger competitive product against SolarWinds, where the big money is – selling directly to end users. This is one off consolidation to benefit a specific business – quest – and not the start of a trend. I agree with Frank, the futre is the cloud and whether it’s Packettrap, Quest, or anyone else, the solution that wins is the one that takes into account that IT is moving to the cloud at a rapid rate. Who the vendor of these cloud management solutions are will be less material – could be anyone.
Frank, Network Engine: I appreciate you both stepping in and raising skepticism about the “consolidation” theme. I do think the market is poised to consolidate but I’m definitely digesting your feedback and keeping it in mind as we plan future coverage. Thanks again.
-jp
Joe, I see very little evidence that credit is easing at all on the commercial side of things. What is happening to increase the likelihood of consolidation is the fact that some previously well run and profitable small companies are out of credit and running out of cash and thus making themselves a target for a takeover from someone who can absorb them and wait it out til the cycle starts to rebound.
Stu: Always good to have your 2 cents reflected. Do me a favor: If/when you personally see the credit situation easing let us know. We’re interested in tracking this through ongoing blog entries.
-jp
Joe – I do think consolidation will happen – at least it did for us at HoundDog. The fact is that this is an exploding market at the junction of three swelling streams: remote management, SaaS and managed services.
I think you’ll see the fast-growing, innovative RMM companies snapped up by other larger players who want to be in this space. We were growing at 300% CAGR over the past 5 years, were profitable and cash-rich, so it wasn’t a matter of desperation for us or, I suspect, PacketTrap.
Nobody will buy the dogs – except in our case! – so expect to see a bunch of the flat-lining bigger players left out to wither while the smaller innovators join up with larger, resource-rich players who can bring both R&D and marketing muscle to the table and spur faster growth.
Doug