Ellison confirms interest in HP's middleware

Ellison confirms interest in HP's middleware

Oracle is in talks to buy all or part of Hewlett-Packard middleware product portfolio, Oracle chairman and CEO Larry Ellison has confirmed.

"We talk to them about it," said Ellison in a session with reporters after he delivered a keynote speech here at Oracle World. He would not say what stage the talks are at, but did say that buying HP's middleware business would be a "tiny" acquisition, comparable to Oracle's takeover of WebGain's developer tools last week.

A small deal for specific technology is within Oracle's strategy, which is to not do any large takeovers, but occasional "very small acquisitions in a technology niche", Ellison said.

"You won't see us buy large businesses," he said.

It is unclear which HP middleware products Oracle has an eye on. The HP portfolio includes a J2EE (Java 2, Enterprise Edition) application server, a transaction server, a messaging server, various XML (Extensible Markup Language) tools, its eSpeak software for building network-based services and its Process Manager business modelling tool.

Ellison said that Oracle's own 9i Application Server "is pretty much fleshed out" and that Oracle does "not need to buy an application server".

Sources said earlier this month that Oracle could buy HP's entire middleware product line.

An HP executive also at Oracle World on Tuesday hinted that HP would sell its middleware business soon. The company disclosed to financial analysts earlier this month that it would "retire" the money-losing middleware products, but had been mum on the topic since.

During his keynote presentation, Ellison promoted Oracle's Real Application Clusters on Linux machines, gave his market view and, of course, bashed the competition. His main target was IBM, which has a giant banner advertising its DB2 database on a building near the Oracle World venue as well as plenty of ads in the arrivals area of the Copenhagen airport.

Kari Kotomäki, an account manager for software developer SysOpen in Helsinki, said he enjoyed Ellison's presentation, but that it was a tad too database-oriented.

"If your only tool is a hammer, then all the problems are like nails. And Oracle's tool is the database still. He spoke pretty much from the database point of view. I think the application server should get a more important role," he said, noting that he did like the major part Linux played in the keynote.

Answering a conference attendee's question about how Oracle will be able to grow while IT budgets are tight, Ellison predicted "a killing field" because of the economic slump and said that Oracle does "not need an IT spending recovery to grow".

"It will be utterly brutal. Most of the small companies will disappear. The number of choices that IT buyers will have in the future will be far less and that is not entirely good news," Ellison said. "You are going to have a consolidation of IT spending on three or four survivors and those survivors will do extremely well."

Supply chain specialist i2 Technologies and procurement software makers Ariba and CommerceOne are among the companies that Ellison believes "will vanish". Their business will go to others, including Oracle, Ellison said.

Ellison also launched a frontal assault on BEA Systems, its chief rival in the J2EE application server market. BEA is the worldwide market leader in that market in terms of revenue, according to several analyst firms. Ellison, who claims Oracle's application server already leads the market in terms of user numbers, said Oracle will pass BEA in terms of revenue next year.

"I think we will be first in terms of revenue in a year," he said, adding that BEA may be the next company to go under. "BEA is under tremendous pressure as a niche player reliant on one product."

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