Palo Alto Networks acquires IBM’s QRadar cloud security assets to expand its customer base

Palo Alto Networks announced on Wednesday that it has reached a deal to acquire IBM’s QRadar cloud software assets as part of the cybersecurity giant’s strategy to expand its customer base and enhance its consultant network. While the terms of the deal remain undisclosed, it’s expected to close by the end of September.

The acquisition will enable Palo Alto Networks to integrate QRadar into its Cortex extended detection and response (XDR) platform, delivering advanced threat detection, investigation, and response functionalities across various IT environments, including cloud, on-premises, and hybrid setups.

As part of this multi-year agreement, IBM will emerge as a strategic partner for Palo Alto Networks, offering consulting and managed security services across Palo Alto’s entire security portfolio, the companies said in a joint press release.

According to Nikesh Arora, Palo Alto’s CEO, this migration process typically spans one to three months. Additionally, IBM will train more than 1,000 consulting employees on Palo Alto’s products, further solidifying the partnership.

“The security industry is at an inflection point where AI will transform businesses and deliver outcomes not seen before. It’s a moment to accelerate growth and innovation. Together with IBM, we will capitalize on this trend, combining our leading security solutions with IBM’s pioneering watsonx AI platform and premier services to drive the future of security platformization with complete, AI-powered, secure-by-design offerings,” Arora said.

This acquisition comes amidst a wave of consolidation in the security software industry, driven by the escalating threat landscape catalyzed by artificial intelligence. Recent notable deals include Cisco’s $28 billion acquisition of Splunk, positioning Splunk as a dominant player in the SIEM market. Furthermore, the merger announcement between Exabeam and Thoma Bravo’s LogRhythm underscores the industry’s consolidation trend.

In a bid to fortify its competitive stance against Splunk, Arora emphasizes the imperative for Palo Alto Networks to bolster its offerings. Despite previous competitive overlaps in SIEM software between Palo Alto and IBM, both companies have successfully navigated their strategic partnership discussions, culminating in this acquisition agreement.

IBM’s decision to adopt Palo Alto’s Cortex XSIAM and Prisma SASE 3.0 products underscores the mutual benefits of this collaboration. Notably, Palo Alto will integrate IBM’s Watsonx large language models into Cortex XSIAM, complementing its existing partnership with Google for AI models.

IBM Chairman and CEO Arvind Krishna said:  “Strategic partnerships like the one we’re announcing today with Palo Alto Networks bring with them significant benefits across the industry. Advanced threat protection and automation, underpinned by Cortex XSIAM and watsonx, and coupled with IBM Consulting, will speed client and partner adoption of next-generation security operations. We’ll deliver these capabilities with Palo Alto Networks, and accelerate our security investments and innovation in areas like data security and identity and access management. These are critical offerings that our clients need when protecting their data, hybrid cloud environments, AI models and applications. We are delighted to be partnering with the Palo Alto Networks team and we are excited about the future of AI-powered cybersecurity innovation.”

While the SIEM category has a longstanding history, Palo Alto’s Cortex XSIAM, introduced just two years ago, has rapidly gained traction, achieving over $90 million in bookings in the latest quarter. Arora emphasizes Palo Alto’s growing market share and its commitment to delivering innovative cybersecurity solutions.

As Palo Alto Networks continues to expand its cybersecurity offerings through strategic acquisitions and partnerships, the industry awaits further developments in its quest to address evolving cyber threats effectively.