Aricent’s IP Partnership with … IBM
At the time of the acquisition Aricent announcement, Altran had mentioned the existence of an IP partnership between Aricent and an unnamed technology vendor.
It did not take too much time to find that Aricent had indeed signed in H1 2017 a partnership with IBM around, at least, three Sterling Commerce products (Connect: Direct, Connect: Express, and Connect: Enterprise), and also around for Power Systems (PowerHA for AIX).
The IP partnership mechanisms seem to be similar to that adopted by HCL Tech, i.e. the ER&D vendor is paying a large sum of money (in the case of Aricent, USD 250m over four years) to IBM, enhances the software products (and receives fees from IBM for this), and shares fees with IBM for selling licenses. At the end of a period (the exact duration is not known, but varies according to what we are hearing between five and ten years), IBM will regain full license rights. For more information, please refer to this analysis of HCL Tech’s partnership with IBM.
The IP acquired by Aricent represents about USD 50m in annual revenues, so this is a significant amount. We assume this amount represents product development fees paid by IBM, not software license fees.
While we understand the high-level logic of this mechanism, i.e. bring a flow of IP revenues to IBM, but we still are to understand the details of it, and the business case for spending USD 250m. We will keep on investigating.