Oracle, Sun deals shake up middleware market

"In the old client/server world, you have DB2 or Oracle on a server running payroll, or accounting, or other financial applications," says Marten Mickos, CEO of MySQL. "But accounting doesn't grow. On the Web, everything grows. That's the main difference here."

And that requires a different, more modern database, he says. "MySQL is unique in that we are the only significant relational database designed for the Internet, to save data to Web pages," Mickos says. "All the others were designed before the Internet, for offline applications."

Sun's global tech and customer support, plus its fat R&D budget, are just what MySQL needs to penetrate the large-company market, says Noel Yuhanna, principal analyst with Forrester Research. "They've done very well in the small-medium business market, and with smaller database applications," he says. "The larger enterprise is where the problem was: People were concerned about the long-term viability of MySQL."

But the move brings Sun and MySQL more squarely into competition with Microsoft's SQL Server 2005, says Josh Farina, analyst with Technology Business Research (TBR). "TBR believes Microsoft has taken [market] share away from the open source databases at the departmental or small-business level," he says. "Microsoft's out-of-the-box integration with other pieces of the Microsoft stack is a strong differentiator."

For Sun's billion-dollar gamble to pay off, it will have to maintain and strengthen ties with the open source community and tie the MySQL database ever more tightly into the emerging open source software framework for the Web.

BEA stares down Oracle

Meanwhile, BEA's leaders thought they could do better than Oracle's US$6.7 billion offer three months ago, and they did. (Some of the sting of paying US$8.5 billion will be relieved by the fact that BEA has US$1.3 billion cash on hand, which will pass to Oracle after the acquisition is completed).

It seems BEA received "a lot of pressure from their shareholders ... when they sort of pushed back hard on the initial Oracle offer, because it was significantly over the historical trading price," Finley says. "They were able to argue 'we can get a better deal,' and they did. It's ultimately a victory for BEA."

It's also a good deal for Oracle, despite the extra US$1.8 billion BEA extracted from the suitor, says Mike Gilpin, a Forrester analyst. BEA's middleware is well-known for handling mission-critical applications and high-volume workloads, so customers will often choose BEA over the less-expensive IBM WebSphere application server, Gilpin says.

IBM nonetheless stands to benefit from the Oracle/BEA deal, Finley says, because of customer uncertainty over the status of Oracle and BEA products, and the fact that two competitors are being reduced to one.

BEA's product lines include AquaLogic, software to help develop and manage SOA components, and other products to integrate, secure and govern the services deployed in an SOA. BEA also makes the WebLogic platform, a set of products including an application server, integration tools and a portal.

BEA customers naturally will worry that Oracle might slow down the rate of BEA enhancements, essentially forcing them to move to Oracle Fusion middleware, says James Kobielus, a Forrester analyst. Another analyst firm, CMS Watch, says BEA and Oracle customers can expect major product shifts, as there are now four overlapping enterprise portal products that have to compete for Oracle CEO Larry Ellison's attention.

Still, Finley says he doesn't expect a wholesale attack on the BEA product line from Oracle management. For one thing, Oracle learned a valuable lesson from the PeopleSoft acquisition, when it faced a customer revolt after declaring it would kill off the PeopleSoft product and move customers over to software developed by Oracle, Finley says.