Another one bites the dust

On January 16th 2007 we saw the announcement that Oracle had entered into an agreement to purchase BEA. So, after the rebuttal at the end of October, BEA has finally agreed to the latest bid by Oracle (Oracle will acquire all outstanding shares of BEA for $19.375 per share in cash). The proposed transaction is subject to closing conditions, including regulatory, shareholder and other approvals. Until the deal closes, each company will continue to operate independently.

Ellison, Oracle’s CEO, is quoted as saying “The addition of BEA products and technology will significantly enhance and extend Oracle’s Fusion middleware software suite”. For those of you who read my previous article, I did not come out in favour of this takeover, as I did not see the benefit to either company’s customers or to the infrastructure market. My experience of these sorts of takeovers is that there is definite stagnation in research and development as well as a number of key individuals leaving organisations. It is interesting to look at Ellison’s follow-up to the quote above: “Oracle Fusion middleware has an open ‘hot-pluggable’ architecture that allows customers the option of coupling BEA’s WebLogic Java Server to virtually all the components of the Fusion software suite. That’s just one example of how customers can choose among Oracle and BEA middleware products”. As BEA did not play in the database space then in the Java world it is only natural that there are a number of joint customers of both Oracle and BEA and that both companies have ensured that their products will work together. However, if Oracle’s new product portfolio will consist of 2 Application Servers, Integration Servers, Event Servers, and so on, at some point (and I would say sooner rather than later) there will have to be a rationalisation of this massive overlap of infrastructure software.

Alfred Chuang, BEA’s Chairman and CEO is quoted as saying “This transaction is the culmination of that diligent and thoughtful process, and we believe it is in the best interests of our shareholders. I am confident our innovative products, talented employees and worldwide customer base will be key contributors to the success of the combined company over the long term. We look forward to working with Oracle toward a successful completion of the transaction”. Interesting. How many of them will want to stay? Compared with Oracle’s takeover of JD Edwards and PeopleSoft there has been little acrimonious debate. However, I would be expect to see some of BEA’s experts leave in the near future for pastures new.

Oracle President Charles Phillips said “BEA is a pioneer in middleware, and this combination recognizes the innovation and customer success the company has achieved. Our joint customers have consistently suggested this deal for more than three years. This transaction will accelerate the adoption of Java-based middleware technologies and SOA; advance innovation in enterprise applications infrastructure software”. From Oracle’s view point they will gain a set of better infrastructure products than their own existing ones, but will this really happen in the end? I would like to see the best products from both vendors ending up as the final infrastructure portfolio offered by Oracle. But, going on past experience, this rarely happens.

As you can see I am fairly negative about this takeover as I don’t think it really helps the market which needs more competition, not less. In the infrastructure space we have a complete polarisation between the very big boys or IBM, Oracle and Microsoft on one hand and the very small niche players on the other. Software AG WebMethods would appear to be the only real player in the middle of this spectrum. Not good for choice! Not good for the consumer!