Oracle, Sun deals shake up middleware market

Last week's billion-dollar acquisitions by Oracle and Sun jolted the middleware market, and raised some new concerns for enterprises pursuing service-oriented architecture deployments and considering the use of open source code to flesh them out.

For enterprises, the concerns are twofold. In the case of Oracle's US$8.5 billion deal to purchase middleware maker BEA Systems, customers worry that overlapping product lines will result in the discontinuation of some products.

MySQL users, meanwhile, will likely keep close tabs on whether new owner Sun (which has offered US$1 billion for the Swedish open source database vendor) keeps the product code as open as they're accustomed to.

On the business front, the deals alter competitive landscapes.

"The Oracle acquisition of BEA will alter Oracle's internal software development, boost its SOA efforts, and of course add revenue to the company. The Sun acquisition of MySQL will change the face of open source software as part of user data centers - and affect the business of open source software in general," says analyst firm Saugatuck Technology.

The deals open up new areas of competition between Oracle and Sun, which have long been friendly because Oracle database software is often used on Sun servers, analysts say. Now Sun is getting into Oracle's core database business, while Oracle snatched up BEA, whose application server and other middleware products compete with Sun's Java Enterprise System.

"They're competing and cooperating simultaneously," says Ian Finley, an AMR Research analyst. "I don't think [Wednesday's acquisitions] will dramatically change the relationship with Oracle and Sun. ... It may drive Oracle to partner more aggressively with other hardware providers. Sun has become less and less relevant to Oracle over time anyway," as Sun's hold on the data center has loosened.

Finley gave credit to Sun for the MySQL acquisition, saying "this is the first interesting thing Sun has done in the last five years. It does shake things up."

Although the Oracle and Sun acquisitions have different strategic aims, one of the most important factors driving each deal is IBM, according to Charles King of the Pund-IT analyst firm.

"Just as IBM has come to represent the gold standard in IT services," King writes, "its highly integrated middleware strategy and development efforts have enabled the company to compete head to head with and regularly beat specialists such as Oracle, and to entirely surpass the efforts of traditional systems vendor competitors like Sun."

Sun's bold buy

Sun's US$1 billion play for MySQL AB is a deft move, and a dangerous one.

It's deft because it exploits a trend toward open source software, and Web-based, online applications. It's dangerous because this "Web economy," as Sun CEO Jonathan Schwartz dubs it, is also the prime hunting ground for Oracle, IBM and especially Microsoft. Sun and MySQL have sidestepped the traditional database market to jump feet first into the emerging one.

Both companies are betting that the open source software stack LAMP - named for the Linux operating system, Apache Web server, MySQL database and PHP scripting language - is a perfect fit for the Web-based, service-oriented software architecture taking root in the enterprise.

The deal "puts Sun into a leadership position in the LAMP stack," says Raven Zachary, research director for open source at The 451 Group. "This is a major shift in Sun's database strategy. We're likely to see more moves by Sun in the future to move its open strategy to the next level."

Both companies also are betting that the next generation of emerging, fast-growing companies will be more open to open source than traditional enterprises.