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Oracle/BEA fusion would rock SOA vendor landscape

Oracle Corp.'s announced plan to buy BEA Systems Inc. appears to be a less friendly transaction today than it did on Friday, but it could transform SOA tools marketplace, analysts say.

Oracle Corp.'s announced plan to acquire BEA Systems Inc. for $6.7 billion will rock the world for vendors specializing in software for service-oriented architecture (SOA) if it goes through, analysts say.

I think they'll have a tough choice trying to figure out how to consolidate the tooling space.
Anne Thomas Manes
Research DirectorBurton Group Inc.

Over the weekend, executives of Oracle and BEA could not agree on anything from the sale prices to whether they were planning to meet Friday to work out the deal, but analysts do agree that if and when this acquisition goes through, it will be a major game changer in the SOA marketplace with Oracle moving beyond current rival SAP AG, to challenge IBM for leadership.

Adding BEA's WebLogic platform and the wide range of tools and portal technology associated with it would significantly enhance Oracle's own Fusion middleware products for SOA, analysts say. With WebLogic in the hands of Oracle's aggressive sales and marketing organization, it might be in the position to challenge IBM's WebSphere for dominance in the SOA market.

Oracle's Friday announcement was something less than a surprise to analysts who cover the SOA and middleware market, as BEA has been a rumored takeover target for the past several years with Hewlett-Packard Corp. and even Microsoft sometimes thought to be potential buyers."

"I'm shocked, shocked that Oracle would buy BEA," Anne Thomas Manes, research director for Burton Group Inc., said in a play on the famous line by Claude Rains in Casablanca. Turning serious she said this has the potential to be a big deal.

One motivation for the acquisition by Oracle is that it removes BEA WebLogic as a competitive roadblock to Oracle Fusion middleware, she said.

"I think that Oracle has actually put together a nice package of middleware," she said. "It's just really hard to knock the incumbents out of place and the incumbents are IBM and BEA. The best way to compete against IBM is to buy up the number two player, which is BEA."

Beyond knocking a competitor out of place, Manes said BEA would add valuable technology to the Oracle Fusion product line, including what she rated as one of the top enterprise service bus (ESB) products available. She said both companies have good business process execution language (BPEL) engines although she rated Oracle's tops. The Oracle BPEL engine is based on technology it acquired with its purchase of Collaxa Inc. in 2004. Both companies have portal products, but she said, "You can't have too many portals."

Bradley F. Shimmin, principal analyst of application infrastructure at Current Analysis LLC, agreed that the purchase of BEA would change the competitive landscape.

"If it does go through, it would be a very, very good thing for Oracle," Shimmin said. "It would significantly undermine a number of Oracle's competitors, not just BEA. BEA is a company that has maintained a very large array of technological partnerships over the years. Most solutions run on or integrate with or rely on their WebLogic software. It will be fairly disruptive technologically if this does happen."

One issue to be resolved he said is the overlap in technology Oracle and BEA currently offer especially for portal tools, ESBs and apps servers.

"For the basic infrastructure components of SOA solutions there is tons of overlap," he said. "But at the end of the day, there are a number of key holes in Oracle's armor that BEA really is going to fill in for them."

One plus, in Shimmin's view is that the two companies share a vision of where SOA is going.

"For example, Oracle's whole event-driven architecture focus matches with BEA's WebLogic event server and real-time server and virtualization. Those technologies are going to bolster what Oracle has already started."

Oracle would also be able to take advantage of the lead BEA has over it in providing Software as a Service (SaaS) options to independent software vendors (ISVs) and customers.

Both companies are also pursuing a Web 2.0 approach and BEA has worked this year to develop products that Oracle could use, Shimmin said. He also said the two companies have a similar approach to leveraging open source.

Dana Gardner, principal analyst of Interarbor Solutions LLC, also sees overlap application servers and middleware, in the Oracle and BEA product lines, but sees BEA offering unique technology for handing data in an SOA environment.

"BEA has done a lot with data and the ability to create data services that's going to fit well with Oracle," Gardner said. "Oracle is not quite as ecumenical in its approach to data. Oracle is a bit more focused on Oracle databases, but SOA requires being inclusive with a broad reach into data as well as transactions and applications. I think BEA brings strong integration and extension functions to the Oracle portfolio."

Asked how Oracle might integrate the BEA products into the Fusion line, Manes said that some products from each company would likely be dropped and added based on which technologies were deemed best., but she noted that both companies already offer integration into heterogeneous environments, so their products are already mixed and matched by customers.

"With Oracle and BEA you can plug and play the different components in the environment without any problem," she said. "So that's a benefit to this integration project."

Manes said Oracle could feature the BEA WebLogic application server because it has a huge installed base and is excellent technology. For a portal, Oracle could use technology BEA acquired with its 2005 acquisition of Plumtree Software Inc., which it made the user interface for its AquaLogic SOA product line, as well as the AquaLogic ESB, the AquaLogic data services tools, and the AquaLogic enterprise repository. For the BPEL engine, the choice would likely be the technology Oracle got from Collaxa. The Oracle Java Messaging System (JMS) product might be the choice for messaging.

"The nice thing is they can pick and chose the pieces that they want and assemble a pretty comprehensive middle technology system," she concluded.

When it comes to tools, however, Manes sees more of a challenge in deciding what will fit where because both Oracle and BEA have good tools for their product lines, but they are different approaches to tooling.

"Oracle has a comprehensive tooling environment, JDeveloper, and if you go with the full Oracle Fusion middleware environment plus of Oracle Application Environment, it's very helpful to use JDeveloper because it's well integrated," Manes explained. "Oracle also has specific tools for each of the products available as plug-ins to the Eclipse environment."

BEA has gone in a different direction with its tools, she said.

"BEA has built this nice Eclipse-based Workshop product, which encompasses the popular frameworks, things like Struts, Spring and Hibernate," Manes said. "It's really nice tooling from the BEA space."

She concluded that this is not going to be an easy product integration problem. "I think they'll have a tough choice trying to figure out how to consolidate the tooling space."

Another unanswered question if the deal goes through will be what happens to users of BEA's Tuxedo legacy transaction processing product, said Shimmin at Current Analysis LLC.

"I think all the people who are Tuxedo users are probably going, 'Oh God, now what?' That's one of those product lines that is legacy, but is a good moneymaker for BEA. I don't know where that would fit into Oracle's roadmap. So there will be questions that need to be answered there."

For more information
Oracle world view: SOA morphs into enterprise mashups

SOA provides Oracle with vertical BPM lift

When the technological questions will be answered depends on how long it takes for the deal to get done.

Asked if this acquisition might drag out as Oracle's less than friendly takeover of PeopleSoft did, Gardner noted that with investor Carl Icahn holding a significant share of BEA stock, he will probably want to make sure he gets the most money possible out of the deal. Meanwhile he notes that Alfred Chuang, chairman and CEO of BEA, is on record opposing any sale of his company.

"Alfred Chuang at the top has been adamant about not wanting to sell the company. That's going to be a tussle between the leadership and investors, particularly with Carl Icahn being involved. I do imagine that there's some acrimony and tense discussions going on at BEA. It's a very, very big decision for them."

As for the possibility it could drag out as the PeopleSoft deal did, Gardner said, "It's very difficult to predict these things. Oracle knows how to play this game and so does Carl Icahn. It will be interesting to watch how it unfolds."

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