Oracle offer will freeze new BEA business, analysts say

Database vendor must also address problem of overlapping product lines

Oracle's US$6.6 billion bid for BEA Systems will effectively freeze the latter's efforts to gain new customers and force Oracle to face questions on how it will handle overlapping middleware product lines, analysts say.

Mike Gilpin, an analyst at Forrester Research, said BEA users could find that some of their investments in the company's middleware technology "will not be as easy to preserve going forward in areas where there's overlap between [the companies'] portfolios."

He did add, however, that "it's possible Oracle could follow a 'kinder, gentler' strategy that would not rationalize as much of the overlapping middleware platforms as would be ideal from a cost-minimization perspective, just to keep those BEA customers happy." He also noted that "many of them are already Oracle customers."

Gilpin added that Oracle may move to segment middleware customers based on the size of the company, pushing BEA products to large firms and Oracle technology to the midmarket.

"If you're a BEA customer at the high end, you'd be OK," he said. "But in the midmarket -- and in some categories where BEA is trying to expand its business, like business process management and Web 2.0 -- those products would be at risk."

Gilpin also noted that Oracle has been able to hang on to customers it gained in its acquisition of PeopleSoft because companies are typically locked in to business applications. However, he said application server users would be more likely than ERP users to look to an IBM or Microsoft to replace their BEA tools if they are not happy with how Oracle handles the acquisition.

Yefim Natis, a vice president and analyst at Gartner, said that the announcement of Oracle's intentions "freezes the market for BEA, which means BEA must be sold" now. He said that other bidders may also jump into the fray to buy BEA, which has suffered several quarters of declining license revenue primarily due to the commoditization of the Java application server market.

"The technology has become easily available, and no one can really charge high prices for it," Natis noted.

He also predicted that while "new purchases of BEA technology will dramatically decrease," current BEA customers shouldn't expect a drop in support. "It will be no worse than BEA support. I don't believe there will be a reason for the installed base to dramatically run from Oracle," he said

From BEA, Oracle will get a "technically better" J2EE middleware stack along with BEA's family jewel, the Java Virtual Machine, he added.

Charles Phillips, Oracle's president, said in a statement that it would protect the investments of BEA customers if the deal moves forward. "Our continuing support commitment has been amply demonstrated with all of our previous acquisitions, including PeopleSoft and Siebel. BEA will be no different," Phillips said in the statement.

Laurent Lachal, senior analyst at Ovum, said in a research note late last week that protecting BEA customer investments is likely to be a high priority for Oracle.

"For a start, it's not in Oracle's interest to get customers to defect," he noted. "It can point to its record with PeopleSoft, where after a very contentious takeover that many customers opposed, Oracle has managed to hold on to and even in some cases enhanced the user base for PeopleSoft products."

Oracle, Lachal said, has spent the past three years positioning itself aggressively against BEA based on its database and applications server and an aggressive pricing strategy.

"More recently, when stating its quarterly results, it repeatedly stated that it had not just caught up but overtaken BEA in the infrastructure space, partly because of acquisitions," he said.

BEA officials have not commented on the offer.

James Niccolai of the IDG News Service contributed to this report.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Heather Havenstein

Computerworld
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?