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 newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Heather Havenstein

Show Comments

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?