Oracle Unveils Plan of Attack for BEA Technology Integration

| Jul 3, 2008 | Application Infrastructure | Competitive Update

| Analyst: Brad Shimmin

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Very High

Event Summary

July 1, 2008 – Oracle has announced a roadmap that combines Oracle and BEA technologies. The vendor has created a technologically prudent plan that calls for an immediate product release cycle to ensure compatibility, followed by a longer term update process that will remove redundancies and leverage synergies across most of Oracle's product lines. By focusing on customer issues such as pricing/licensing and cross-product technology pollination, Oracle has proven that its acquisition of BEA is not merely a play for market share or geography.

Analytical Summary

• Current Perspective: Positive on Oracle's announced roadmap that combines Oracle and BEA technologies, because it creates a technologically prudent plan that calls for an immediate product release cycle to ensure compatibility, followed by a longer term update process that will remove redundancies and leverage synergies across most of Oracle's product lines. By focusing on customer issues such as pricing/licensing and cross-product technology pollination, Oracle has proven that its acquisition of BEA is not merely a play for market share or to expand its geographical reach.

• Vendor Importance: Very high to Oracle, because the Fusion Middleware product line is the fastest growing division within Oracle (prior to the acquisition of BEA), any missteps in terms of supporting its current customer set could undermine that success. With this announcement, Oracle has created a plan that brings value to its existing products without any interruption to anticipated release cycles, while ensuring that existing BEA customers are brought smoothly into the fold via licensing grandfather clauses and the continuation of existing products.

• Market Impact: Very high on the middleware software and services market, as Oracle can now squarely rival IBM middleware customer-for-customer with a combined (BEA and Oracle) customer base of more than 77,000. Truly a technology acquisition, Oracle has established a roadmap that will move key markets such as telecomm and uses cases such as high-performance messaging and event-driven computing. However, it also strengthens Oracle's reach into the Asia Pacific market and gives the company a much needed injection of middleware ISV partners.

Recommended Competitor Actions

• All rival vendors should position Oracle's acquisition of BEA as being very slow to develop. It took Oracle roughly a quarter to move from intent to acquisition and another quarter to finalize the deal, spanning back to last November. And while the vendor will deliver a sweeping series of updates this summer that will seek to create points of integration between Oracle and BEA solutions, the vendor won't realize much of its BEA roadmap until its Oracle Fusion 11g release sometime in FY 2009.

• Rivals should point out that Oracle's effort to standardize and homogenize BEA's pricing models represents a sword that cuts both ways for new versus existing customers. Certainly a move to net-based support costs will benefit all customers, but Oracle's move to a flat (non-tiered) model for Tuxedo and a flat (non-localized) pricing structure for international buyers will put new BEA customers at a disadvantage under some conditions. Also, Oracle's pricing list (published in June) calls for some steep (upwards of 35 percent) price increases for select BEA products.

• Rivals should point out that while Oracle will quickly leverage numerous technologies within its new WebLogic Application Server, the vendor is still at the outset of adopting the OSGi to create a more modular server architecture.

• Rivals with portal offerings (TIBCO, IBM, Sun and SAP) should consider Oracle's portal roadmap to be particularly threatening, owing to the vendor's creation of a single SKU (Oracle WebCenter Suite) that pulls in all other portal products and blends user interaction elements including content management, Web 2.0 tools, presence, search, analytics, human workflow and .NET integration. Oracle's long term strategy to make this platform its strategic interface for all Oracle applications, coupled with the company's unifying post BEA acquisition roadmap will present problems for portal providers not able to field a comprehensive solution.

• Rivals with Java virtual machine strategies (notably Sun, Red Hat and TIBCO) should note that while Oracle will seek to leverage its acquired virtualization technology across its product set (combining Coherence Grid with JRockitReal Time within its application server, for example), the company will continue its Hot-Pluggable strategy, supporting JVMs from HP, IBM and Sun equally. Oracle will also certify BEA's Liquid VM with its Xen-based Oracle Virtual Manager.

• Rivals should pay close attention to Oracle's planned incorporation of the BEA Guardian project. More than a mere software update tool that checks for incompatibilities, Guardian works to preemptively stave off problems by comparing system/resource snapshots with BEA's support database, notifying customers of potential problems stemming from environment and software mismatches. Oracle will integrate this tool within its Enterprise Manager in 11g+ Grid Control, enhancing its ability to deliver high performing platform with limited downtime.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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