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International Business Machines (IBM - Analyst Report) continues to go ahead with its acquisition for growth strategy. The company recently announced the acquisition of privately held firm The Now Factory, which provides analytics software to communications service providers (CSPs) to improve customer experience.

Using The Now Factory's software, CSPs can gather real-time insights about their customers through network and business data analysis, which will help them to take prudent business decisions and offer improved services.

This type of software is witnessing an increase in demand, driven by the volume of real-time data generated by mobile devices. The CSPs need to process this huge volume of data in quick time, monitor performance, and understand the impact of customer interaction.  

Informa Telecoms and Media, a research firm, estimates that by 2016, the average mobile phone subscriber will use 6.5 times video, 10 times gaming data, and 8 times more social media and music data. This presents a huge growth potential for this kind analytics solutions, in our view.

We believe that this acquisition will help IBM in the long run, as it adds to “IBM MobileFirst Analytics portfolio,” which is mainly used by organizations to analyze mobile device usage to enhance customer service.

The current acquisition will expand its product portfolio to higher-growth segments, such as business analytics, IT security, cloud computing and software.

In fiscal 2012, IBM completed 11 acquisitions for an aggregate cost of $3.96 billion. IBM plans to spend approximately $20.0 billion on acquisitions though 2015, which is expected to boost top-line growth by approximately 2.0%. We believe that IBM will continue to pursue strategic acquisitions to boost its product portfolio, going forward.

However, IBM is expected to face tough competition from the likes of Oracle Corp. (ORCL - Analyst Report), Hewlett-Packard Co. (HPQ - Analyst Report) and Microsoft Corp. (MSFT - Analyst Report), in the near term.

Currently, IBM has a Zacks Rank #3 (Hold).

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