Microsoft pals up with Opalis?

Contact: Brenon Daly, William Fellows

Having already seen a trio of notable runbook automation (RBA) startups get snapped up by major tech players, we’re now hearing buzz about another pairing. Word is that Microsoft has snagged Opalis Software for about $60m, according to both financial and industry sources. Opalis, which has raised $25m in venture backing, is thought to be running at about $10m in revenue – a much higher level than its rivals at the time of their acquisitions. Current CEO Todd DeLaughter is the former head of Hewlett-Packard’s OpenView division.

The rumored deal comes more than two years after a pair of high-multiple RBA pickups put the focus on the sector, and a year since the industry’s most-recent significant transaction. In March 2007, Opsware (now part of HP) spent $54m in cash and stock for iConclude, and four months later, BMC paid $53m for RealOps. Both iConclude and RealOps had only just started to produce any revenue at the time of their respective purchases. And exactly a year ago, CA Inc reached for Optinuity, which we understand was also generating sales in the low single digits of million of dollars.

As that wave of consolidation swept through the RBA market, Opalis positioned itself as an independent alternative to the offerings from the system management giants. Of course, that would be lost if the company does indeed end up belonging to the Redmond behemoth. It wouldn’t be surprising if Microsoft does announce the deal. We understand that the company had a preliminary look or two at Optinuity before that startup sold to CA a year ago. More significantly, Microsoft and Opalis announced in late April a joint technology agreement that saw, among other things, Opalis integrated into Microsoft’s System Center Operations Manager 2007 and System Center Virtual Machine Manager 2008 consoles.