The possible acquisition of BEA Systems Inc. by Oracle Corp. will put the database vendor on par with IBM Corp. in the application infrastructure space, but there still is room for the remaining independent middleware vendors, analysts said.
A combined BEA and Oracle, by revenue, will be roughly equal to rival IBM minus its mainframe software, said Yefim Natis, vice-president with Gartne. "That essentially establishes a duopoly of Oracle and IBM in the application infrastructure space which is going to be very hard for anyone to approach and compete against."
Microsoft, too, he said, will share this position alongside Oracle and IBM.
Although the consolidation will serve to stabilize the middleware arena, said Natis, it may also mean rising prices and the commoditization of some basic technologies.
However, this possible consolidation doesn't signal the end for the remaining middleware vendors, said Natis. In particular, the JBoss Application Server will turn out to be a "beneficiary" when customers begin to seek an alternative to a BEA/Oracle offering "because JBoss has an outstanding product as an application server."
But it won't be a mass exodus, said Natis, although there will be an increase in deployment of JBoss if the acquisition goes through.
Other independent vendors in the middleware space won't be much affected, like Tibco Software for instance, said Natis, given it offers services-oriented architecture infrastructure that's not BEA's core technology, and therefore not direct competition. "[Those vendors] are not interchangeable."
Independent middleware companies' ability to serve specific customer needs not offered by large vendors is reason enough to remain solo, said Ray Wang, principal analyst with Cambridge, Mass.-based Forrester Research Inc.
Actually, if BEA Systems -- which commands more mind share than others in the space -- gets acquired by Oracle, the move will make the remaining vendors more attractive to entities looking to leverage their position, said Wang.
"It's interesting when you take out one of the largest middleware vendors, it makes all the smaller vendors much more valuable and potentially other vendors who are trying to play catch-up are looking at them as other acquisition candidates."
Market leaders Oracle and IBM can be expected to further their inorganic growth strategies with acquisition of niche vendors, especially as services-oriented adoption evolves particularly towards business process management, said David Senf, director of security and software research with Toronto, Ont.-based analyst firm IDC Canada.
But acquisition by a large entity is not the sole remaining option for middleware vendors, thinks Natis, given the continued interest and demand for the likes of the independent middle guy. "There is always going to be a constituency, the users, who are best of breed users -- those looking to buy technology from the innovators, the specialist."
There's still ample innovation to be had in the middleware space, he added, most of which will not come from giant corporations "who can never move as fast as the specialists. There is plenty of space for the new guys."
Should the acquisition go through, the advantages to independent middleware vendors like Progress Software will be to reinforce the credibility of their strategy and create an "enormous distraction" to the companies involved, said the Bedford, Mass.-based company's vice-president of enterprise infrastructure division Tim Dempsey.
But middleware vendors will always have a role to play, considering Oracle has lost credibility with its Fusion Middleware which was designed to address interoperability around Oracle products, said Dempsey. "And whenever they assert that [intended capability] to a customer, that customer is going to invite someone in to challenge that view because they take the view that you need to be neutral."