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Thursday, February 09, 2006

Oracle & Opensource Acquisitions

Bweek reports that oracle is in talks to purchase at least three software companies that would help it shift customers to a subscriber-based model. JBoss,Zend & Sleepycat Software are said to be the candidates.Ellison recently said that his company is moving aggressively into open source - embracing it & not going to fight this trend. Ellison wants to become businesses' most important software provider and turn customers into one-stop-shop subscribers. Subscriptions are a huge shift from a model where the name of the game is getting huge upfront payments from corporate customers. In the case of open-source and on-demand software, companies pay little to nothing upfront, instead paying a monthly fee for hosting, support, or maintenance. Oracle has set its sight on getting stronger in middleware- Jboss could help here.
The deals could prove savvy defensive moves too. Right now, Oracle is the only company selling databases, a full line of applications, and middleware for large corporations. Microsoft does the same with midsize companies, while IBM doesn't do applications, and SAP doesn't sell databases. As open-source versions of all of these technologies gain steam, the last thing Ellison & Co. want is another major software vendor to cobble together comparable depth. Technologies like PHP and JBoss are key ingredients in the bulk of open-source deployments, and if these deals go through they'll be in the hands of a large traditional software player. That may worry opensource community a lot. But this could be good move from oracle’s standpoint – both defensive and outflanking strategy in action. Some were talking about a LBO type moves to create a new stack of enterprise applications. Vinnie points to Tom Peter’s comments on oracle’s acquisitions. I recently wrote that Oracle has a huge integration challenge ahead but has promised its worried customer base to provide long-term support for new and existing versions of its applications. One unintended consequence seems to be that hosting solutions grow in the wake of Oracle acquisitions. Interestingly whats the price for acquiring marketshare in enterprise market - I % share is 1 Billion USD!! Look from another perspective – its scary to be an oracle employee - Insiders can throw some light on this. For those concerned about oracle’s depressed stock prices – these moves may get more and more curiouser. But it has to be granted that the recent set of moves are really good moves.

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