(Bloomberg) -- Palo Alto Networks Inc. announced on Wednesday that it had closed a $500 million deal to acquire some cloud security assets — and customers — from IBM Corp.
As part of the deal, Palo Alto is buying IBM’s QRadar software-as-a-service assets, with the intention to migrate those customers to Palo Alto’s broader security offering, Cortex XSIAM, according to Chief Executive Officer Nikesh Arora.
“We’re paying them to effectively not do it anymore and let us do it,” he said, referring to IBM. The deal could ultimately net Palo Alto thousands of customers, he said.
Products from rivals such as Cisco Systems Inc.’s Splunk and Microsoft Corp. dominate in the market segment devoted to threat detection, investigation and response. With the IBM purchase, Arora predicted that Palo Alto will soon become known as a leader in this category too, as it seeks to provide a variety of cyber tools on one platform.
The closing of the deal, which is subject to regulatory approval, comes as the Palo Alto CEO calls for consolidation in a cybersecurity market he argues remains too fragmented, saying many companies are running products from as many as 40 different cybersecurity vendors.
More than 1,000 IBM consultants will also sell Palo Alto products, while Palo Alto will also deploy IBM’s watsonx to help manage AI and data, according to company announcements.
Andrew Davies, an analyst at Gartner, said products in the threat detection, investigation and response segment are growing more sophisticated, in line with customer demand. The deal will likely benefit IBM by giving the company access to sell Palo Alto products to its customers, as well as letting IBM dispose of an offering that wasn’t the market leader, he said.
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