Market share and technology, a sometimes unbeatable combination, is the raison d'etre behind Oracle's acquisition of BEA, say several industry analysts.
What Oracle wanted was access to the high-quality, large installed customer base that BEA owned. The high-end customers who use middleware for the most demanding applications are owned by either BEA or IBM, so this acquisition inches Oracle closer to IBM's scale, says Yefim Natis, a Gartner vice president. If the acquisition is approved by the SEC, it will still put Oracle in second place behind IBM as the leading application infrastructure vendor.
But analysts differ as to whether the acquisition will mean a merger of the two companies' middleware into a refused Fusion, or that Oracle will instead offer two separate product lines, as it does with its acquired PeopleSoft and JDEdwards applications.
"When Oracle buys a company, it usually buy it because it has better technology that beat it in the market," Bart Narter, a senior analyst with Celent, a financial research and consulting firm. Narter said BEA's technology has some real advantages, especially in the securities industry, where firms are looking for low latency with performance in the single digit millisecond time frame to handle the huge volume of trades.
But the biggest implication for IT is that the acquisition brings "best of breed" functionality into the middle layer of the Fusion platform, Narter said. It is likely that the next version of Fusion middleware suite will be a combination of both BEA and Oracle products, Natis said: "Users should not make the assumption that BEA products will be discontinued."
For example, JRocket is the leading JVM, one that has significant extensions beyond the basics, said Gartner's Natis. It's an example of a BEA product that is complimentary to Fusion. "It is a no-brainer. JRocket is [one of] BEA's family jewels," he said. By contrast, Natis noted that Oracle's OC4J (Oracle Container for Java) is "an ordinary product" while JRocket is "arguably the best implementation of J2EE in the industry." He expects JRocket to replace Oracle's J2EE solution.
Likewise, BEA earlier acquired Fuego, which was considered the industry leading technology for BPM (business process management), another jewel that can be brought into Fusion, Natis said.
However, analysts from both IDC and AMR see it differently. While BEA may be used to fill in gaps in the Fusion portfolio as Natis indicates, Dan Vesset, a senior analyst with IDC, believes Oracle will maintain the two independent, but competing product portfolios.
"We expect to see Oracle operate BEA as a key brand within its Fusion middleware portfolio. We do not expect too much in the way of product rationalization," Vesset said. Rather than delaying Fusion, Vesset said Fusion is on its own path. Where BEA has an offering that will help Fusion, it will be used and could even speed the introduction of Fusion, he added.
Dennis Gaughan, a research director at AMR Research, agrees with Vesset, saying that some of the BEA tools could be used to accelerate Fusion middleware capabilities. Gaughan also said that Oracle has made it clear that Fusion middleware is the company's strategic middleware platform and will not be replaced by BEA's or any other acquired products. "Larry [Ellison] reiterated that this morning," said Gaughan.
What most analysts agreed on is that the key to owning the enterprise's IT business will by owning the middleware that IT uses. "The middleware touches everything," said Natis, "it is the switchboard."