Palo Alto Networks Set to Buy Cloud Security Assets From IBM

Paloalto Networks

Palo Alto Networks is acquiring cloud security software assets from IBM as part of an expanded partnership that will provide the cybersecurity company with access to more consultants and a larger customer base.

In a joint press release, the companies announced that Palo Alto is purchasing IBM’s QRadar cloud software for an undisclosed amount and transitioning existing customers to its security platform, Cortex Xsiam.

According to Palo Alto’s CEO, Nikesh Arora, this transition typically takes between one to three months. Additionally, IBM will train over 1,000 of its consulting employees on Palo Alto’s products.

Consolidation in the security software industry has been accelerating as companies brace themselves for an increase in attacks driven by artificial intelligence. In March, Cisco completed its $28 billion acquisition of Splunk, the networking company’s largest deal ever, acquiring the leading provider of security information and event management (SIEM) software.

Paloalto Networks – IBM

Earlier on Wednesday, two other companies in the SIEM market, Exabeam and Thoma Bravo’s LogRhythm, announced their plans to merge.

Arora emphasized the need for his company to better prepare itself to compete against Splunk, acknowledging the intense activity in cybersecurity consolidation.

Palo Alto and IBM have been enhancing their collaboration for several months, with Arora and IBM CEO Arvind Krishna discussing ways to advance their partnership. However, both companies previously offered SIEM software, which posed a challenge.

Krishna clarified that the Splunk deal did not prompt IBM’s arrangements with Palo Alto, as they do not compete with most of Cisco’s portfolio.

In December, IBM announced that its consulting group would offer Palo Alto’s competing Cortex Xsiam software to customers. Now, IBM will adopt Cortex Xsiam and Palo Alto’s Prisma Sase 3.0 product bundle.

IBM Computing

Additionally, Palo Alto will integrate IBM’s Watsonx large language models into Cortex Xsiam, complementing its existing use of models from Google.

While the SIEM category has been established for over two decades, Palo Alto introduced Cortex Xsiam just two years ago. The platform has rapidly gained adoption, generating over $90 million in bookings in the latest quarter and taking market share from competitors, according to Arora.

For IBM, expanding its lineup of contemporary security tools for consulting services could help drive revenue growth. Palo Alto is experiencing faster growth than IBM, with revenue increasing by 19% in the January quarter.

The transaction between Palo Alto and IBM is expected to close by the end of September, subject to regulatory approval and other conditions. IBM will continue to sell its QRadar software for use in on-premises data centers, while also encouraging clients to consider transitioning to Palo Alto’s Cortex Xsiam.

Jessica Smith
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