Web Analytics Company Coremetrics Aquired by IBM

IBM will gain the ability to deliver powerful business analytics solutions with web analytics capabilities, after they announced a definitive agreement to acquire Coremetrics, a company, which creates software to help companies develop marketing campaigns that can return real-time intelligence on consumer reaction, and allow clients to make accurate decisions on marketing expenditures.

Coremetrics is a developer of web analytics software and a privately held company based in San Mateo, CA. Coremetrics delivers web analytics capabilities to over 2,100 brands in industries such as retail, financial services, media, and publishing. Some of Coremetrics clients include Bank of America, Holiday Inn, PETCO, and Office Depot

IBM’s acquisition of Coremetrics stifles innovation in the web analytics market. Worse, other big deals are contributing to the trend, e.g., Adobe’s purchase of Omniture and ATG’s purchase of Webtrends. Okay, the ATG Webtrends deal hasn’t happened yet, but it could.

The problem is that acquired companies find it very difficult to innovate. Their attention and effort is now focused on integration with the acquiring company rather than innovation within their product lines. That problem is then compounded by an exodus of talent. Young, energetic, entrepreneurial people don’t necessarily want to work for the acquiring company, so they leave.

The next logical innovation for Coremetrics – and Omniture, for that matter – would be a move to real time analytics, with the aim of optimizing the experience of individual visitors and increasing conversions. But that would require a complete rearchitecture overhaul. IBM, however, isn’t likely to make the investment. The company just bought Coremetrics, and reengineering a last-generation analytics architecture is a long, expensive process that wouldn’t produce results for a year or more, if not years.

Meanwhile, Google continues to advance the cause and capabilities of free analytics. Yahoo! has free analytics as well, but Google Analytics is really the 800-pound gorilla here. With base analytics increasingly becoming free, paid analytics providers face constant pressure to deliver more capabilities and functionality.

What does all this mean for users? Lower prices. Most customers that have Omniture, Coremetrics or WebTrends also have Google Analytics, which puts huge pressure on the paid vendors to differentiate and reduce prices when renewing contracts and when signing new business. Meanwhile, customers running both WebSphere Commerce and Coremetrics can look forward to tighter product integration in lieu of lower prices.

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