M&A is starting to cloud the boundary between two tech realms: Hardware and software.

On Thursday, Intel Corp. (INTC) said it would buy Wind River Systems Inc. (WIND) for $884 million. Among Wind River's products: Software used in mobile devices, something that dovetails with Intel's interest in pushing its Atom processor for portable consumer electronics gear.

Intel isn't the only technology company trying to glue hardware and software together through acquisitions. Driven by game-changing business strategies -- often focusing on the nascent field of "cloud computing" -- and lured by low market valuations, companies like Oracle Corp. (ORCL) and EMC Corp. (EMC) have snapped up or are fighting to buy smaller companies they expect will spur a tighter union of the two key components of technology.

With valuations beginning to rise, tech companies are starting to make big strategic bets to fuel their next growth phase before potential targets get more expensive. Much of the deal-making has brought the different disciplines of hardware and software together.

"What you're seeing is larger companies making significant bets on closer integration between hardware and software," said Howard Lanser, director of mergers and acquisitions for brokerage Robert W. Baird. "This is the ideal time for strategic buyers."

Though it is difficult to tell precisely how much tech deal-making has brought hardware and software together, activity has clearly picked up over the last several months, according to data tracker Dealogic. Deals announced since April account for 80% of the $26.9 billion in technology transactions so far this year.

Growing belief that valuations are as low as they're likely to get has helped fuel the deals, analysts say. While the S&P 500 Software and Services index is still a third below where it was a year ago, it is up 11% year to date and has outperformed the broader S&P 500, driven in part by hope of deal-making.

One dynamic fueling software M&A is the expected growth in cloud computing, which uses data centers to host both data and computing power that is accessed over the Internet. Cloud computing involves both the hardware that data centers run on and software that automates and operates it. The move toward cloud computing will likely prompt big companies to look for smaller companies in order to offer a comprehensive range of services and products.

One recent example: Oracle's $7.4 billion acquisition of server-and-software-maker Sun Microsystems Inc. (JAVA). The acquisition gives the Redwood City, Calif.-based database giant access to Sun's high-end servers that it can bundle with its database and business software products.

It also gives Oracle the Java programming language, a key component to many online applications. The software can be used to create programs that customers access over the Internet, the essence of cloud computing.

Earlier in the week, tax preparation and accounting software maker Intuit Inc. (INTU) said it was buying privately-held PayCycle Inc., a maker of payroll software that is accessed over the Internet.

"Cloud computing is the most significant shift in technology since the outset of the Internet," Ivan Brockman, a senior managing director at Blackstone Group, said. "It will be a big driver of M&A."

Other deals are brewing that could see a blurring of the roles between hardware and software companies. Two companies that make data storage devices, NetApp Inc. (NTAP) and EMC Corp. (EMC), have each bid $1.9 billion to acquire Data Domain Inc. (DDUP). Data Domain's attraction: software that removes duplicate copies of information from computers, a key tool in data centers used to power cloud computing.

-By Jessica Hodgson, Dow Jones Newswires; 415 439 6455; jessica.hodgson@dowjones.com