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• 1. Many of the identity management tools were built when users were bound to desktops within the enterprise. Encentuate is one of the new breed of identity management vendors with products that map more to today’s needs for strong security, auditing, support for mobility. Companies like Encentuate have effectively reinvigorated the identity market with systems that fit today’s business needs and don’t require an army of consultants for product implementation and customization.

For Encentuate, this acquisition proves that there is still plenty of upside for venture-backed technology start-ups that pick the right market opportunities and execute on their product development and business plans. For IBM, the days of force-fitting products into the market are long gone. IBM now seems to be operating with a culture of constant improvement, regardless of whether this progress comes from within or outside of the company.

• 2. Before this acquisition, IBM could point to its Tivoli identity management portfolio and match Encentuate on product functionality. Yet, IBM decided that it made better business sense to simply replace its legacy code through an acquisition than enhance its existing wares. This shows some real guts on IBM’s part. IBM made sure to reassure existing customers that it will integrate Encentuate into its current portfolio over time to provide them with a smooth transition.

This week, IBM once again added to its deep security portfolio by acquiring identity specialist Encentuate for an undisclosed amount. I like this deal for two reasons:

And although choice is what we all want, and I believe it could happen eventually, it’s not going to come from Dell and a loose alliance of partners. Instead, it’s going to come when the Old Guard leaves and a new generation of fresh ideas and business models starts dictating this industry.

“Apple wants to lock you in,” Robert Enderle said to BusinessWeek. “Dell wants to lock you in to choice.”

That’s not to say that this is an indictment of Dell or what it’s planning, but this is an indictment of the protectionist policies that are so rampant in the tech business right now. Suffice it to say that choice is not paramount in any company’s business model and more often than not, they want devices and software to be locked down for a reason–it keeps customers in-house and doesn’t let them stray.

Sure, it might appeal to us and I certainly think that’s a neat idea, but based on the information we have, it sounds like there are too many moving parts and too many people involved in the decision-making to make this a viable service.

“Customers want access to content from a broad variety of sources–how, when, and where they choose,” Michael Dell told the publication.

Check out Don’s Digital Home podcast, Twitter feed, and FriendFeed.

The idea will be unveiled in September and will attempt to give you more choice in how you buy and consume media, BusinessWeek reports. More importantly, Dell will give its partners the software they need to establish the solution and will try to turn a profit on the sale of hardware.

The music industry is the most obvious sticking point in this whole solution. Granted, Dell claims it has most labels on its side, but we can’t forget that this is an industry that’s extremely worried and scared of change. And if anyone can buy just one song from Amazon and ship it to a friend’s car stereo, I don’t see the music industry being too keen on that.

Choice is something that we should all have, but the current state of the tech industry and company cultures dictate that that’s simply impossible. Call me a cynic, but I simply don’t see Microsoft being too excited about people buying a song from a different vendor and listening to that on the
Zune. And I certainly don’t see Jive Records getting excited when one person buys a song and sends it to five friends on five different devices from five different companies.

Sorry, Dell, I think you’re ahead of your time.

I look forward to the day where the content I buy from one service will work on anything I want it to work on, but I don’t think we’re at that point yet.

But it goes far beyond the music industry. There seems to be too many moving parts and too many companies with a hand in what’s happening for this to be a success. You mean to tell me that I should expect this new standard to beat Apple because companies like Kenwood, Amazon, Dell, EMI, Microsoft, iRiver, HP, XM Sirius, LG, and RIM are going to play nice with each other? I don’t think so.

According to BusinessWeek, Dell plans on taking aim at Apple and will unveil a solution that could see companies from a bunch of industries working together to create the first solution to give consumers real choice.

But will all those choices translate into a profit and a new standard that will take iTunes and every other proprietary service down? Will buying a song on Amazon.com and sending “it to the mobile phone of a friend or the
car stereo of someone who has satellite radio” really work?

The EA letter warned that further Take-Two delay in accepting EA’s proposal could prevent Take-Two’s shareholders and other constituents from realizing its benefits. “There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today,” Mr. Riccitiello wrote. The letter added that timely completion of the proposed transaction would allow EA’s strong publishing and distribution network to positively impact the ongoing post-launch sales of GTA IV and support the new Take-Two titles scheduled for launch later in the year and during the holiday selling season.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

John Riccitiello

We also believe the transaction we are proposing will create value for EA’s shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Two’s and EA’s corporate and publishing infrastructures and by optimally supporting Take-Two’s creative teams and intellectual properties in EA’s decentralized label structure.

We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Two’s creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Two’s talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best – create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Two’s studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

Electronic Arts Proposes to Acquire Take-Two Interactive Software for $26 Per Share in Cash, or Approximately $2.0 Billion Proposal Represents 64 Percent Premium to Take-Two’s February 15th Closing Price and 63 Percent Premium to Take-Two’s Closing Price Over the Previous 30 Days REDWOOD CITY, Calif.–(BUSINESS WIRE)–Electronic Arts Inc. (“EA”) (NASDAQ: ERTS) today announced that it has proposed to acquire Take-Two Interactive Software, Inc. (“Take-Two”) (NASDAQ: TTWO) in an all-cash merger valued at approximately $2.0 billion.

Maybe there’s something in the water but now we’ve got another hostile software battle under way. This time it’s Electronic Arts bidding $2 billion in cash to acquire Take-Two Interactive. The sides are not exactly off to a smashing start with Take Two publicly telling Electronic Arts the offer simply ain’t up to snuff.

Chief Executive Officer

Dear Strauss:

There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA’s strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year’s holiday selling season. We believe Take-Two’s current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

As noted in EA’s Feb. 19th letter, EA’s proposal is not conditioned on any financing requirement. It is, however, subject to certain customary conditions as set forth in the letter. EA’s $26 per share proposal is based on the current equity capitalization of Take-Two. Although EA indicated in the letter that its proposal was subject to negotiations commencing by Feb. 22nd, EA intends to keep its proposal open for the present to give Take-Two’s shareholders and Board of Directors further time to consider it.

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.’s (“EA’s”) $25 per share cash offer to acquire Take-Two Interactive Software, Inc. (“Take-Two”) and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA’s offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Mr. Strauss Zelnick Executive Chairman of the Board of Directors Take-Two Interactive Software, Inc. 622 Broadway New York, NY 10012

With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.

We believe that Take-Two’s shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

Here’s the EA press release:

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two’s shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22.

EA’s proposal was contained in a letter sent on Feb. 19th by EA Chief Executive Officer John Riccitiello to Strauss Zelnick, Executive Chairman of the Board of Directors of Take-Two. The Take-Two Board’s subsequent rejection of the EA proposal led to EA’s decision to release the letter and bring its proposal to the attention of all Take-Two shareholders.

We also believe that any delay in this proposed transaction works against the interest of Take-Two’s shareholders, because:

The full text of EA’s letter to Take-Two follows:

EA’s proposal of $26 per share in cash represents a premium of 64 percent over Take-Two’s closing stock price on Feb. 15th, the last trading day before EA sent its revised proposal to Take-Two, and a 63 percent premium over Take-Two’s 30-day trailing average price over the thirty trading days ending on that date.

Our revised all-cash offer represents a 64% premium over Take-Two’s most recent closing price and a 63% premium over Take-Two’s 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.

February 19, 2008

To be continued.

(Update: Check out this piece for more context authored by my News.com colleague Daniel Terdiman.)

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two’s shareholders.

Mr. Riccitiello said today: “Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Two’s game designers would also benefit from EA’s financial resources, stable, game-focused management team, and strong global publishing capabilities.”

Sincerely,

With yesterday’s launch of the WiiWare service, it’s now easier than ever to fill up your Wii to the point of full capacity. It doesn’t take much to fill up those 2,163 blocks (about 512MB)–between additional channels, the virtual console, and now WiiWare, you’re going to need to be doing some serious maneuvering if you want to experience everything the
Wii has to offer. So why hasn’t Nintendo come up with a solution that can allow owners to expand the storage capacity?

(Credit:
Nintendo.com)

While the SD card slot is nice, for many Wii owners it has become strictly a way to back up game saves. You can’t directly access it in-game nor can you play virtual console or WiiWare games directly off of it. Why not enable this? Surely this can be accomplished with a Wii system update. And by limiting the memory capacity, Nintendo is essentially preventing customers from buying more virtual console and WiiWare titles.

Rumors of a storage add-on have come and gone, with nothing ever manifesting. If Nintendo plans on adding a new WiiWare title every Monday–in addition to the new virtual console titles they release each week as well–something needs to be done to address this growing concern.

While we’d all like for the SD card slot to allow in-game read and writing capabilities, or for the ability to connect a USB flash-drive, we’re guessing it will probably be a Nintendo-branded storage solution that may wind up costing twice as much as it should. We’d personally like to see something like this inexpensive 60GB USB drive, which would also leave room for even bigger WiiWare titles down the road.

How do you think the Wii storage situation should be addressed?