Bagging BEA Systems Won't Be Easy

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Other Suitors May Come Forward

Oracle may not find itself alone in bidding for BEA either. "There are companies that really need what BEA has," says John Rymer, vice-president and principal analyst at Forrester (FORR). Rymer and other analysts point to likely candidates such as IBM (IBM), SAP (SAP), and Hewlett-Packard (HPQ). All three companies declined to comment on whether they would submit a bid for BEA, although an SAP spokesman said his company is focused on a competing product, called NetWeaver. "It's a huge success," says Herbert Heitmann in an e-mailed message. "Oracle's step makes only sense for someone who hasn't been able to deliver a homegrown [version of the same platform] to the market."

Besides, SAP just made a $6.8 billion bid (BusinessWeek, 10/8/07) for Business Objects (BOBJ) on Oct. 7. Rymer also sees Sun Microsystems (JAVA), Software AG, and even potentially Cisco Systems(CSCO) as possible bidders.

Even if rivals don't emerge, Oracle has cause to keep pursuing BEA. The takeover would help Oracle become an even more formidable competitor to IBM, says Yefim Natis, vice-president and distinguished analyst at Gartner (IT).

BEA's Hot Properties

Among the most attractive BEA products are ones known as jRockit, Tuxedo, and WebLogic, Natis says. JRockit makes it possible for Java operating system applications to run with increased reliability and performance. Analysts say the BEA acquisition may give Oracle greater access to the telecom and financial-services industries. "What they haven't sold is the broader middleware platform," says Bill Swanton, vice-president of research for AMR Research. Part of that middleware platform is transaction-processing software that drives many key systems for banks and telcos.

WebLogic is also used in telecommunications, helping phone companies upgrade to Internet protocol systems from outmoded systems common to traditional phone networks. "WebLogic Communications allows telecom companies to move from a switched network to IP, which they all want to do," says Forrester's Rymer. "BEA has been out there for two years, and it's a hard problem. Oracle has just started."

King is a writer for BusinessWeek.com in San Francisco .