Will BEA Sell to
Oracle?"> Bart Narter, an analyst with Celent, a Boston-based financial research and consulting firm, agreed that the BEA deal would fit Oracles tradition of buying best-of-breed technology. "BEA offers top-notch applications servers, ESB and BPM software," Narter said. "With this purchase, which comes just days after SAPs bid for Business Objects, Oracle can now go head-to-head with other companies, such as IBM and SAP, in offering service-oriented architecture [SOA] infrastructures to the largest enterprises.""One answer to that question may lie with SAP," he said. "Oracle has likely felt pretty safe in the knowledge that no one else was going to buy BEA. IBM, no, and few other software companies could make a deal stick. With SAPs bid for Business Objects this week, however, everything changed. SAP made a clear statement that its business model was set for major change [and] M&A [mergers and acquisitions] was now firmly on the table." When he heard of Oracles bid, Ron Schmelzer, an analyst with ZapThink, thought, "Its about time." Schmelzer said BEA has not been able to clearly differentiate or adequately articulate its SOA offerings or products in the market for the past two years. IBM, Software AG and others have been able to much better capitalize on the new opportunity that SOA represents, "while BEA still seems to waffle between being a Java infrastructure company that wants to urgently work its way up the stack or a heterogeneous SOA player that is still too committed to the underlying Java platform to make their vision a reality," he said. In general, BEA faces a crossroads, he said. The company must either pursue the best-of-breed and stay true to its Java-based infrastructure roots or pursue a platform strategy, which means more aggressive acquisition activity, Schmelzer said. "This might be the right time for BEA to be absorbed by another party, if it cant adequately and convincingly make that decision," he said. "Oracle certainly is a good home for BEA. It consolidates the SOA infrastructure runtime market and helps to advance the Oracle Fusion picture with BEAs AquaLogic Service infrastructure play. I think it would be a win for BEAs customers to be part of the Oracle portfolio." Burton Group analyst Anne Thomas Manes said BEA has a stronger presence in a number of markets than does Oracle, including the Java Enterprise Edition application server, integration broker, enterprise service bus, SOA governance, data services and portal. Although Oracle is a significant player in most of these marketswith the exception of SOA governance and data services"IBM and BEA clearly dominate," Manes said. "Assuming that Oracle manages to execute the acquisition reasonably well, it will put Oracle on equal footing with IBM." Yet, Manes said should the deal go through, Oracle would "embrace the BEA middleware family over the existing Oracle Fusion middleware stack." How the deal would go through is still unclear, analysts said. "Oracles bid is likely hostile," Rymer said. "I dont expect BEAs board to accept it. So the game is just beginning. Other bidders may emerge. SAP needs BEA more than Oracle does to bolster its middleware. But can they do both Business Objects and BEA? IBM would make sensebuy BEA to consolidate the high-end of Java Web app market and keep Oracle out. Sun and Cisco are dark horses. Everyone will talk about HP, but I doubt that." Hewlett-Packard as a buyer also crossed Baers mind. However, he said, "Theyve got their hands full already, BEAs not as synergistic as Opsware. And of course, we all remember Bluestone." Dennis Callaghan, an analyst with The 451 Group, noted that BEA has had some issues with delinquencies in its regulatory filings and so could be open to a sale. "Itll also be interesting to see if HP steps in," he said. "Theyre pretty bullish on software and are becoming strong in SOA management since buying Mercury. Buying BEA would give them a nice middleware counterweight to IBMtheir biggest rival. HP and BEA have a very close relationship today and Chuang would likely be more open to being acquired by them than by Oracle." Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.
James Governor, a London-based analyst with RedMonk, questioned why this move was not made three years ago.