While the potboiler of the Oracle (ORCL)-solicits-BEA Systems (BEAS) story simmers on the front burner, there could be another option for BEA’s board. Rather than BEA — which states it will be happily acquired for $21 per share — awaiting another software vendor to rescue it from the flinty grips of Oracle, why not seek out an entirely different sort of buyer?
A handful of the world’s largest telecommunications carriers, I should think, ought to give serious consideration to BEA’s plight. BEA would would do well to become the R&D arm, underlying infrastructure differentiator, integration hub, and sales/marketing channel lead into leading enterprise accounts for any carrier that needs to jump-start its business services offerings.
Now, I have suggested Microsoft (MSFT) might broaden its appeal to datacenter architects the world over by buying BEA, but Microsoft remains drunk on its growth potential as a Windows Everywhere vendor. And Microsoft would, seemingly, rather be late to the Web 2.0 bubble with a Facebook stake than late to the heterogeneous enterprise IT environment with a BEA-enabled segue to full IT and SOA solutions offerings.
Be that as it may, consider how a BEA would fit into a full-service telecommunications carrier’s dominion in this pending new world of services, SaaS, subscriptions and the need for technology differentiation as carriers increasingly find themselves competing against Google (GOOG), Apple (AAPL), Microsoft (MSFT), Salesforce.com (CRM), Yahoo! (YHOO), Amazon (AMZN) and eBay (EBAY).
Right. So if a Verizon (VZ), AT&T (T), Sprint (S), Deutsche Telekom (T), Orange (France Telekom), or other large carriers were to consider having BEA as part of their organization, what would they get? First, consider that carriers were behind a lot of purely technical advances in computing, with Unix, networks, patents, and R&D emanating from such places as older AT&T, Bell Labs, Westinghouse, and even General Electric (GE). So the precedent of carrier conglomerates being in the IT supplier and R&D business is fairly well established, and the recent history of these global giants outsourcing their IT is the exception over the past 50 years. IBM and Microsoft would not be where they are otherwise.
We also hear the lament that carriers are bit pipes that perform the commodity work of building the networks and engaging and servicing the end users while the content, infrastructure and software developers earn the higher margins and jump first on the new opportunities. There is truth there.
Nowadays carriers are shouldering the mammoth costs of making the world ready for TCP/IP everything while trying to integrate for a triple and quad play offering of Internet, phone/voice, entertainment, and mobile. And for what? So others like Google or Disney (DIS) can monetize the new advertising models, Apple can sell the music and (maybe) video/TV, and Amazon can sell the rest. And so Microsoft can follow their lead and carve out the industry?
Well, what if the carriers returned to their technical roots, and began the IT pioneering work again that would allow them to keep (and sell) faster, better, cheaper underlying technology (like Google and Amazon have done so well) while leveraging standards and open source as appropriate, and while also providing strong software infrastructure products (and increasingly services) to the large enterprise BEA-type, leading adopter accounts. I think many large businesses would welcome buying software, services and support from their largest networks, telecom, and mobile providers. There’s one throat to choke, and the efficiencies and discounts of volume, global purchasing. Of course, they would have to execute very well, which means they need excellent technology and technologists — and BEA has certainly been that.
A savvy carrier that executes well — and exploits IT rather than be disintermiated by it — could offer some fascinating bundles of BEA-type solutions (on premises, off premises, hybrids, co-locations, grid, virtualized) with their other business-class offerings. They could build BEA middleware-empowered appliances or platforms that could drop into these accounts and tie-in back to the optimized networks and datacenter services. After all, the real commodities are what are below the BEA portion of the stack, like operating systems and databases.
These carriers could race to SOA and SaaS benefits quickly and directly, in ways that benefit their futures — rather than be held in the waiting as Microsoft figures out the Live world and IBM deliver business services via SOA that further disintermediates the carriers and networks providers.
I know it’s a stretch, and it bucks current thinking. But something like a BEA-ATt&T mashup — as long as BEA stands alone inside the maw to well-service its current and new direct software customers — has some very interesting synergies. Remember that AT&T owns Sterling Commerce, which has been doing quite well at a higher level of SOA and supply chain efficiency work.
A BEA-AT&T-Sterling mashup — an integrated and optimized hub of business ecologies and commerce — is rather attractive on many levels. Meanwhile, the BEA software intellectual property remains to be harvested, and could be quickly expanded upon with a flush R&D budget. An acquired BEA could be the tail that wags the AT&T (or other carrier) dog.
Yes, Oracle’s synergies with BEA are formidable and may be worth $17 per BEA share. But an innovative, imaginative telco with a 20-year business and consumer services development horizon (with both built on a common yet differentiated technical foundation), may enjoy synergies that do place BEA at $21 per share, comfortably. It’s time for telcos to master the entire IT spectrum (again) and provide full solutions, at aggressive prices. It is, after all, about the ability to deliver the goods through the pipe that counts.
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