Oracle Needs to Settle on a Growth Strategy Following BEA Acquisition

Includes: BEAS, ORCL
by: Karthikeyan D S

News is coming in that Oracle (NYSE:ORCL) is buying BEA Systems (BEAS), a leader in middleware software, for $8.5 billion! This news comes on the heels of news that Sun Microsystems (JAVA) is buying MySQL, a leading database company for $1 billion! These are two great pieces of a great consolidation story in the enterprise software industry.

BEA will add its strong middleware portfolio to Oracle. But what is really interesting here is the fact that, Oracle for years has been working towards making Oracle Fusion, its own middleware platform, as the key for its success. Oracle has now invested close to $30 billion on its acquisitions to date and this is really shaking the industry to its core.

Oracle's acquisition blitz began with its almost $10 billion acquisition of PeopleSoft. It really solidified Oracle as a serious player in the enterprise applications industry. A slew of acquisitions followed - almost 40 in total - part of a list that includes names as big as Hyperion, Siebel, Agile and I-Flex.

Larry Ellison, Oracle's CEO, is saying that 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. He also claims that this acquisition is just one example of how customers can choose among Oracle and BEA middleware products, knowing that those products will gracefully interoperate and be supported for years to come.

Though this makes things really simple and easy, I am sure it will take a great deal of integration work. More important than integration is how Oracle is going to position its millions of dollars spent on integrating its current middleware - Fusion - with competing technologies it bought.

No doubt that Fusion and BEA are gold standards in middleware and to a reasonable extent, both are interoperable, thanks to open standards. But, now what does Oracle sell aggressively going forward - Fusion or BEA's Weblogic? I expect Oracle to integrate Fusion and BEA to come up with a new Fusion! Oracle will need to do a lot of reassuring of BEA's customers to convince them of its new strategy.

But these are pains of any acquisitions and who better than Oracle to do this - 40 acquisitions and $30 billion in acquisitions is a great deal of experience. Together, Oracle and BEA could provide a series of joint and complementary middleware solutions, including identity management, business intelligence and performance management, enterprise content management, and vertical-specific technologies like a communications service delivery platform. The deal is expected to close by mid-year and once BEA's numbers are added to Oracle, the stock market will certainly react pretty positively to this development.

Disclosure: None.