Toronto-based software reseller SoftChoice Corp. has further bolstered its presence in the U.S. market with the acquisition of one-time dot.com darling Beyond.com’s Government Systems Group for US$ 3.1 million in cash.
“”This opportunity was too good to turn down,”” said Dave MacDonald, president
of SoftChoice.
The acquisition cuts two-years off of SoftChoice’s process to become authorized to sell to the U.S. federal government.
SoftChoice required General Services Administration or GSA access. GSA is the federal government’s purchasing organization in the U.S.
“”Without GSA access you cannot sell to the federal government, which is not hard to do, but then you have to be authorized by the various vendors such as Microsoft to resell their software under their GSA contract. That is quite an exercise,”” MacDonald said.
Also, the timing of this deal was right, according to MacDonald. The U.S. federal government is going to significantly increase its spending on software especially security solutions in the wake of the events of Sept.11th of last year.
Gartner research has pegged the spending to be more than US$6 billion, just on software, this year and close to US$10 billion by 2005.
“”If you look at the corporate software space and to our competitors such as CDW, PC Connect and Insight, they are reporting flat growth and the only place they are growing is where they have access to the federal government,”” MacDonald said.
“”We, on the other hand, have good growth in the corporate space but this area is growing faster than the rest of the market and we wanted to make sure we were capitalizing on that opportunity.””
Included in this deal is Beyond.com’s ATLAS License Management Technology, which automates the software licensing and error validation of software so that code does not go missing.
With this sale, it more than likely marks the end for Beyond.com, which at one time nearly reached a market cap of US$1 billion. Beyond.com also made headlines in Canada for its all Canadian-born management team comprising of former Merisel Canada president Ron Smith, former Compaq Canada vice-president Ron Hulse and former Radius Canada general manager Maire Kushner. Smith could not be reached in time to comment on this story.
Beyond.com filed for bankruptcy back in January of this year. They sold off its only other unit, the e-stores to Digital River.
Founded in 1994, with only three employees, Beyond.com went public in June of 1998. They were previously known as Software.net and offered software titles from Microsoft, Adobe, Lotus and McAfee.
“”Beyond.com or whatever is left, I am not sure where they are going to go from here but I would think they would cease being an operational entity eventually,”” said Don Beery, vice-president and general manager of Beyond.com’s Government Systems Group.
For Beery, who started the Government Systems Group in his basement back in 1998, he will not be moving over to SoftChoice.
“”A lot of the folks went over to SoftChoice,”” Beery said. “”SoftChoice is a very fair and reputable company and I think they are going to enjoy working for them. As for myself, I am not going over with the transition just because I think it is time for a change. It has nothing to do with the acquisition or SoftChoice. I probably would have left earlier but since SoftChoice and other bidders were interested I wanted to see this through to the end.””
As for SoftChoice, this acquisition gives the software reseller full coverage of the corporate and government markets in the U.S.
“”SoftChoice, as a Canadian company, is well positioned to be the fastest growing reseller in the industry in the U.S.,”” MacDonald said.
“”It also builds on our base as the largest corporate software reseller in Canada. We fully intend to be in that position in the U.S. and this is one of the key pieces of the puzzle to do that,”” he added.
