James Hamilton's Blog

After hearing about Oracle's offer to to buy BEA for $6.6 billion, I was talking about it with a friend of mine and he had some interesting things to say:

"It's basically a massive change to the whole way that middleware is going to be done. Oracle is now the new Microsoft but with an enterprise stack, rather than MS which basically has a home/small office stack that can scale up to enterprises for office products, but not much further.  Once upon a time enterprises went to places like SAP, PeopleSoft, JDEdwards, etc., for their apps. These people in turn offered different implementations on different runtimes from BEA, IBM, Sun, MS, etc., which in turn offered different runtimes on different stacks from different vendors that in turn offered different stacks on different databases, and OSs, and so forth. The total cost of ownerships was therefore large, and the middleware and bottom guys only existed because the top-level app vendors wrote products on their stack.

Now, the rules have changed. Oracle owns PeopleSoft and JD Edwards; they own SleepyCat; they own BEA; and of course they have their own enterprise database. This means they have the stack from top to bottom, with the exception of an operating system. They can take the CRM and banking and insurance and end-user apps that they now own, host them on an entire stack, and basically squeeze the middleware vendors out of existence. The company that is most at risk from this is IBM,  which doesn't have any end-user enterprise apps, but have everything beneath that (i.e., WebSphere, DB2, and a whole bunch of middleware products). What we could see is the story by which Microsoft took over the desktop (i.e., to bundle the stack together) spreading to the enterprise middleware.  For example, Microsoft killed Lotus, Borland, Novell and others who had desktop products, because they owned the OS and owned office and basically could out-market and out-develop the point products. Likewise, we can see that Oracle can do likewise, as they own an entire stack down to the database layer; if they manage to rebrand and rehost their tools on a proprietary stack, they might be able to squeeze out everyone else."