Palo Alto Networks (NASDAQ:PANW) and IBM (NYSE:IBM) announced a wide-ranging partnership to deliver AI-powered security outcomes for customers on Wednesday evening.
IBM announced that it was selling its QRadar SaaS assets to PANW for an undisclosed amount, while, among other items, IBM becomes a preferred PANW service provider and will standardize its internal security solutions on PANW's platform.
Analysts noted that IBM's security software has been underperforming the broader software portfolio, declining 1% in 2023 and another 3% in 1Q24.
"Today's announcement may signal IBM feels more competitive as a service provider in certain security segments," they wrote. "IBM historically focused its go-to-market on an IBM bundled solution; however, has significantly expanded its partnerships with other technology vendors in recent years as it migrates away from that strategy," added the firm.
"IBM recently reclassified its security services revenue from software to Consulting, perhaps signaling its desire to raise its profile as an independent provider of security-related consulting services."
Meanwhile, Morgan Stanley stated the partnership is a win for platformization.
"We are incrementally positive PANW post their expanded partnership with IBM. This benefits PANW in multiple ways: 1) accelerates market share in Security Analytics/SIEM, where PANW is now a top 3 player, 2) significant customer expansion win, 3) expands distribution through IBM services," wrote the bank.