SolarWinds Looks to Shine in Other Markets

Jan.24.11 | About: SolarWinds, Inc. (SWI)

By Brenon Daly

Having built a billion-dollar market cap through a cheap and easy offering for network management, SolarWinds (NYSE:SWI) is looking to take that approach to new markets through small acquisitions. Exactly a year ago, the company picked up Tek-Tools to add storage management to its portfolio, and now it steps fully into application performance management (APM) with its reach for Hyper9. SolarWinds is handing over $23m in cash for Hyper9, with terms also providing for a possible $7m earnout.

The addition of the small Austin, Texas-based startup, which had only about $2m in sales, gives SolarWinds its first stand-alone APM offering. (In the past, SolarWinds had a much less robust APM offering as a module to its flagship Orion product.) It also brings the company into more direct competition with management giants such as Hewlett-Packard (NYSE:HPQ), CA Technologies (NASDAQ:CA) and Quest Software (NASDAQ:QSFT), among others.

In terms of competition, we would note with some irony that in a recent technology bakeoff that a nationwide grocery chain held for a monitoring product, Hyper9 got the nod ahead of SolarWinds, among other vendors. (See the full details in our User Deployment Report; subscription required). So maybe part of the thinking at SolarWinds for the deal was, if you can’t beat them, buy them.