• This is a really good move for IBM as it establishes IBM as the de facto leader in Cloud integration
• This gets IBM some really good mid-sized clients and a mid-sized client-friendly business model
• Cast Iron offers significant value to IBM’s customers by radically simplifying the process of integrating cloud-based apps like SalesForce.com, google docs and a host of others either with eachother or with “non-cloud” apps like SAP.
• The number of different API’s and, indeed, API approaches adopted by different SaaS and Cloud players makes it a real pain to integrate them – Cast Iron makes it possible to link SAP with SalesForce.com in seconds rather than days or weeks
• While this is an excellent addition to IBM’s integration portfolio, it has also added (yet) another way to specify how two applications interact which places the onus on IBM to help customers decide which approach/technology to use

This is a really good move for IBM as it establishes IBM as the de facto leader in Cloud integration

Cast Iron Systems was originally founded as a web-EAI company and has recently repositioned as a cloud integration company. The company offers a combination of middleware, tooling and adapters that allow a range of cloud and non-cloud applications to interconnect.

IBM has been working on addressing the integration challenge presented by the explosive growth in the number (and adoption) of SaaS applications so will have been well aware of the the value that buying all of this technology already built – and pretty widely deployed.

This gets IBM some really good mid-sized clients and a mid-sized client-friendly business model

Looking at Cast Iron’s client list, it’s clear that the company has enjoyed a deal of success in the mid-market – which is the segment that is most actively adopting SaaS in anger, so in acquiring the company IBM is gaining an important foothold in a very important part of the market for SaaS and cloud.

Cast Iron also supports a more mid-sized business-friendly way of doing business (low entry cost, and a range of pricing/charging options that IBM is very likely to replicate elsewhere.

Cast Iron offers significant value to IBM’s customers by radically simplifying the process of integrating cloud-based apps like SalesForce.com, google docs and a host of others either with eachother or with “non-cloud” apps like SAP.

It would be disingenuous to write this announcement of as “IBM Buys some adapters” – but even if it were just that,  the coverage is pretty impressive – with adaptors in place for Salesforce.com,  Oracle CRM On Demand, Google Apps, NetSuite, and others as well as adaptors for  SAP,Oracle EBS,PeopleSoft, JD Edwards and Siebel as well as several others on the non-cloud side of the fence.

The number of different API’s and, indeed, API approaches adopted by different SaaS and Cloud players makes it a real pain to integrate them – Cast Iron makes it possible to link SAP with SalesForce.com in seconds rather than days or weeks

Having waded through the docs for the google API set, Twitter’s, PayPal’s and SugarCRM’s (to name a few), I can tell you with personal experience that it’s a real pain. While all of the API’s are essentially service oriented, they’re all documented differently and all implemented differently. They’re also subject to change. Managing the integration of one of these apps with one that you’ve either developed yourself or that you run on your own systems is “a bit of a pain”, doing it with two is “gnarly” and doing it with more than two starts to become really annoying.

You don’t quite appreciate how much of a pain it is till you see someone demo Cast Iron’s solution to the problem – SAP to SalesForce.com integration was demoed, live, in under five minutes.

Really… it took less than five minutes to have SAP injecting new clients into SalesForce.com. That’s less than 300 seconds!

While this is an excellent addition to IBM’s integration portfolio, it has also added (yet) another way to specify how two applications interact which places the onus on IBM to help customers decide which approach/technology to use

There is a minor caveat – IBM has now got “another” integration technology to offer customers, who are already perhaps a little spoilt for choice when it comes to picking places to drop that integration logic. Unwary clients could find themselves doing really unpleasant and gnarly things by writing custom transformations or business rules within the Cast Iron tooling (which even allows clients to write custom logic in Javascript) . IBM needs to make it clear that the Cast Iron technology is really, really, useful in the context of COTS to Cloud integration but that there may be better places for describing complex business rules and transformations.

This post may be read to the strains of the wonderful Ella Fiztgerald singing “There may be trouble ahead”.

Having slogged through the marathon that was the Oracle-Sun announcement day, we’re left with two immediate impressions:
1.They took a heck of a lot of time to say so little
2.Oracle’s back to the future pitch, while nothing like as badly thought out as some people say, just isn’t going to cut it.

If you’re in a hurry, here are the headlines:

• The back to the 60’s mantra is both more and less nuanced than you might think
• But the integrated stack pitch simply isn’t well enough thought out
• There are two killer reasons why the “single stack” pitch fails: Innovation, and Focus
• Ultimately Oracle’s hardware strategy is simply not convincing enough
• Oracle’s software strategy is much more coherent but Sun brings a mixed bag
• The absence of a services story is the elephant in the room

We’ll be thinking, talking and writing in much more detail about this – so if you’re interested in knowing more, drop me a line – gary@bathwick.com

The back to the 60’s mantra is both more and less nuanced than you might think
Perhaps the most headline grabbing component of the strategy is the notion that Oracle is planning to emulate the IBM of the 1960’s by delivering a highly integrated stack from top to bottom.

Superficially this seems like total nonsense and no doubt the die-hard Oracle knockers will make much of this “backward thinking”. But you have to remember that when Charles Phillips presented the idea he added the caveat “…but built on open standards”. Oracle isn’t advocating a return to the tightly closed proprietary systems of the 60’s; the company is focussing on the “up-side” that came with those integrated systems – improved reliability, better integration, and a single source of support.

The problem with this guiding strategy is that it isn’t anything like as revolutionary as the sound bite might appear. Of course clients want things that are more reliable, offer better performance and deliver better economics (can you imagine anyone saying they want less?). This may be why IBM has been offering tightly integrated hardware and software bundles for a long time, even before it became necessary to describe them as “appliances”.

But the integrated stack pitch simply isn’t well enough thought out
The “integrated from top to bottom” story is superficially appealing, but doesn’t stand up to scrutiny particularly well.

Let’s begin with the “complete systems” chart above. Firstly there is a pretty compelling argument (made by IBM) that there is significant benefit from not having an apps business. IBM argues that customers gain by using a platform that supports the widest possible applications ecosystem – Apps vendors and clients then both gain the best infrastructure expertise and the best industry expertise. When it comes to industry expertise IBM can argue that it offers a breadth of industry expertise that spans a wider range of verticals and runs deeper into the infrastructure than Oracle and Sun’s (with the possible exception of telecoms where Sun really does have deep roots). We were also entertained by Oracle’s characterisation of SAP – they will no doubt be a bit surprised in Walldorf to learn that they don’t have any vertically focussed apps.

Oracle’s primary assertion is that it’s easier to deliver an innovative stack if you own all the components – a point made repeatedly throughout the briefing. In his opening pitch Charles Phillips said this:-

“If you have separate companies at each layer, one company building the DB, another building the storage etc it’s very hard to get those engineers to work together”

He then nodded towards the “big” problem when he said this:

“It’s hard to get those engineers to work together even when they’re in the same company – ask IBM, they know.”

We choked on our collective coffee at this; because IBM does actually know really quite well how challenging it is to get engineers from different groups to work together, because IBM has been doing it for half a century.

In short, Oracle claims that everything will be better in Oracle stack-land because all of the release dates can be synchronised, and integration can be “engineered in ahead of time”. Well, we wish them the best of luck with that; but, saying “we know it’s hard” and even “believing” that it’s hard are a long way from experiencing the challenges associated with coordinating so many different technology life-cycles. All joking aside, as Oracle discovers that this kind of integration really is very hard to do, the company might be well advised to go and ask IBM.

The final point on the ‘total stack’ approach is that some parts of it simply aren’t core to ‘engineering in integration’ – like storage. There’s a reason IBM backed away from manufacturing hard disk drives – If IBM felt that retaining its manufacturing capability would have given it a competitive edge it would have done so. Instead the company sold it, and created a very close partnership with the company that bought it (Hitachi).

There are two killer reasons why the “single stack” pitch fails: Innovation, and Focus
The single stack pitch fails for two key reasons – It doesn’t mean that you can innovate more quickly, and a “focus” on a dozen things nets out as no focus at all.

Innovation first. Oracle is promising to invest $4.3 billion on R&D in 2011 to cover the apps business, middleware, servers, processor design, storage, workstations, and network equipment. By comparison, IBM spent $5.8billion on R&D in 2009, on middleware, servers, processor design, and storage. In other words, IBM is spending $1.5bn more, on fewer things. Oracle won’t be able to invest as much in server design, processor design or middleware development as IBM, either from an overall budget, or a return on investment point of view. IBM’s R&D is already bolstered by partnerships with vendors like Hitachi (hard disks and semiconductors) and Sony (processors) which exist because they deliver far more innovation than IBM (or Hitachi or Sony) could deliver alone.

The further point is that coordinating development to ‘engineer integration in’ means that the whole will generally advance at the speed of the slowest, which will by definition slow innovation down.

Second, the question of focus. Oracle’s acquisition strategy prior to the Sun purchase was absolutely focussed on augmenting Oracle’s already successful applications and middleware businesses. The justification and value creation arguments were clear, and more importantly were focussed on something that Oracle was already very good at. The addition of Sun with its mixture of businesses (and particularly hardware) creates too many areas for Oracle’s senior management to think about – which argues against the ability to focus at all.

Ultimately Oracle’s hardware strategy is simply not convincing enough
While we’re prepared to believe that Oracle will do a better job than Sun did of making their businesses more commercially focussed (although that’s not saying much), we think that at best Oracle will buy a temporary reprieve for the hardware business, rather than preventing a decline that we see as inevitable.

There’s a real danger that Oracle will come to discover, between 12 and 18 months from now, precisely why IBM’s strategy was to walk away from certain elements of the hardware stack and, indeed, why IBM chose not to acquire Sun when it had its chance. In the meantime, IBM (and HP for that matter) will continue to provide a warm welcome to those clients who decide that while the Sun platform isn’t yet “burning”, there’s a distinct whiff of smoke in the air, and they’d rather be on a platform with a clearer more secure future.

One particularly interesting point is that Oracle stated that it’s not all that interested in the X86 market, which implies a level of confidence in Sun’s proprietary processors that the market doesn’t share. Sun cannot ship the volume that is necessary to maintain a viable processor family. A focus on “high value, differentiated products” can easily turn into “unprofitable but expensive niche” unless Oracle can find a way to bankroll the ongoing development of the Sun processor technology similar to the one that IBM found in its deals with the games console suppliers. IBM has shipped tens of millions of processors for games consoles, all of which form part of, and help to fund, the Power family of processors.

Oracle’s software strategy is much more coherent but Sun brings a mixed bag
While Java is the big prize, there are some niche technologies (the identity management technology for example) that add value to Oracle’s software portfolio. Much of Sun’s Java middleware is to be positioned as the reference implementation (which much of it originally was).

Given Oracle’s stewardship of InnoDB we think Oracle will most likely provide a good home for MySQL. But we’re not convinced that technologies like NetBeans are going to enjoy much attention as time goes on.

The absence of a services story is the elephant in the room
For a while now we’ve been characterising this decade as the decade when the power shifts from software to services. In simple terms the 1970’s and 80’s were the decades of hardware, the 90’s and the 00’s the decades of software and we’re now into an era where services holds sway.

It’s a simplistic characterisation of an industry that’s too complex to be defined in such a pat way, but it was interesting to hear the word “solutions” used over and over again by Oracle – as so many others have for the past 20 years – just as vendors like IBM are beginning to talk about “business outcomes”.

Yes, Oracle will be able to find customers that want to buy hardware, and even “solutions”, but the real money, particularly in the high end of the market, increasingly lies in the ability to help customers deliver business outcomes.

This is why, even before Oracle started talking about a return to the 60’s, we felt that the acquisition of a hardware company was basically a retrograde step, and that Oracle’s long term success would have been better served if the company had bought a services organisation. Of course, there’s still plenty of time for Oracle to do that. Watch this space.

• A good move by IBM
• the acquisition builds on IBM’s portfolio in a number of respects
• Lombardi gains access to IBM’s partner community
• Lombardi’s partners gain access to IBM’s sales channel
• Lombardi’s customers gain too
• But of course there’s overlap…
• To get the most IBM needs to do some hard integration
• The billion dollar question (which came from James Governor) is Lotus Live..

A good move by IBM
This is a good acquisition, it gives IBM a more complete story to tell (adding “People” to the Process (WebSphere) and Information (Filenet) triangle that IBM uses when talking about BPM.

The acquisition builds on IBM’s portfolio in a number of respects
But it’s not just the “addition” of more people-centric BPM tooling, Lombardi brings a portfolio of industry vertical expertise, and a methodology/coaching approach that goes down very well with clients.

As I (along with many many others) have been saying for a long old time – “Cool tools” are a fraction of what it takes to effectively “do” BPM, strong middleware gets you just a step closer and the rest is down to your behaviour; The methodology you choose (and how you choose to apply it) represents a big component of BPM success, followed by your organisation’s cultural ability (or willingness) to commit to it.

Lombardi gains access to IBM’s partner community
This move is good for Lombardi too, while the company has managed to gather an impressive customer list, from a broad range of verticals on its own. By becoming part of the IBM family Lombardi gets access to a customer base,  sales force, geographic reach and a partner network that very very few can boast of (I can only think of two tech co’s that come close – Microsoft and HP).

Lombardi’s partners gain access to IBM’s sales channel
I think it’s also good for Lombardi’s partners, who will also get access to geos, channels and potential customers that it would have taken Lombardi decades to develop.

Lombardi’s customers gain too
This acquisition makes Lombardi’s technology more secure not less. This isn’t an acquisition on a whim, Steve Mills has signed off on a few acquisitions over the years and he’s not one for spending IBM money just for laughs.

IBM clearly sees the acquisition as adding that essential “third element” – people-centric BPM where they admit they’ve not been overly strong in the past: IBM is not going to throw this technology away.

But of course there’s overlap…
The natural first question (asked by Judith Hurwitz) related to the potential overlap between the Websphere BPM technology, Filenet and Lombardi. Craig did a sterling job of pointing out the fairly natural positioning of Websphere Dynamic Process Edition as “Process”, Filenet as “Information” and now Lombardi as “People”. But IBM is well aware that without some clear indications about how the overlaps will be dealt with, the “third leg on the stool” gambit will only get them so far.

I agree with IBM’s contention that these different “modes” or “styles” of BPM tend to be done by different people in different parts of the organisation – But if you really want to claim to be “end to end” your integration needs to be a whole lot stronger than BPMN or XPDL file exchange.

In fairness I ought to make a couple of points:

• there has been progress in doing integration between Filenet and Websphere , even if I’d like to see even more
• Lombardi is one of the longest standing WebSphere partners – the Lombardi platform has been running on WebSphere since the early 2000’s so a fair amount of integration already comes for free
• Craig did acknowledge that there’ll be integration work to do

To get the most IBM needs to do some hard integration
In the medium term the “three legs” pitch will work, but long term I’d like to see the links between the modelling tools and the underlying middleware become much more seamless – getting the middleware together should be straightforward, getting the modelling tools to integrate is likely to be gnarly.

The billion dollar question (which came from James Governor) is Lotus Live..
James asked about the integration with Lotus Live, which is closely related to other questions about the two companys’ online offerings (BlueWorks from IBM and Blueprint from Lombardi. As it happens BlueWorks runs on the Lotus Live infrastructure (the url is apps.lotuslive.com/bpmblueworks/), but isn’t all that integrated into the other Lotus Live offerings. Like James, I think there’s a big, big , opportunity here, perhaps more for Blueprint (which is simpler and easier to use than BlueWorks).

In a nutshell:

• Of course this move means HP’s competitive position against Cisco is improved significantly
• And yes, Cisco’s postion vs HP is improved by their alliance with EMC
• I think this will be good for Cisco, HP, and end-user organisations
• Will Cisco buy a services company in the next 12 months? Hmm
• There is evidence that we all have a LOT to learn about selling networking stuff
• Some strong commentary from a proper Cisco watcher..

Of course this move means HP’s competitive position against Cisco is improved significantly
Duh. HP has already signalled a clear goal to compete with Cisco in networking with the Procurve product line, the 3Com deal makes HP’s offering wholly credible at pretty much every scale. Interesting to note the emphasis placed in the announcement on the fact that 3Com’s kit is “modern” – the implicit implication being that Cisco’s is old – but I don’t think the “my asic is faster than yours” drag-race has a long term future.

And yes, Cisco’s postion vs HP is improved by their alliance with EMC
The EMC alliance is pretty good news for Cisco – bolstering Cisco’s datacentre play significantly – bringing storage, management, and virtualisation technology to the Cisco offering.

I think this will be good for Cisco, HP, and end-user organisations
Oddly enough the the two “combined” offerings have a lot in common:

• HP has management tools, Cisco gets them from EMC
• HP doesn’t have virtualization technology to match EMC’s
• HP strengthens it’s networking offering (esp in Security, and large scale switching) making it comparable to Cisco
• HP has storage, Cisco gets this from EMC
• HP has it’s own server tech, Cisco would be mad to enter this market anyway
• HP has a strong x86 server story, Cisco has an emerging (but exciting) x86 server story

For me, this looks good for end-user organisations, in that it means that they’ll have more choice – Choice = competition, and competition leads to innovation – good for all concerned.

The gorilla in the boardroom is HP’s services capability – the combination of HP and EDS is extremely powerful, making HP Services the second biggest in the world. Cisco doesn’t have that kind of services capability…

Will Cisco buy a services company in the next 12 months? Hmm
I can see the appeal – but who would they buy? I think Cisco would be well advised to focus on being a partner to the likes of IBM (assuming the EMC deal doesn’t upset big blue too much) and the other services co’s in the market place, rather than going out shopping for a services arm.

There is evidence that we all have a LOT to learn about selling networking stuff
I was interested to see the extent to which early comments on the HP/3Com deal seemed to focus on individual products and their relative bits and bytes – It would seem that networking is where server h/w was a decade ago – with lots of obsession component feeds and speeds rather than the overall outcome.

If you’re pressed for time :

• It’s sad, and all that, but Sun had it coming : Sun’s performance meant that acquisition was inevitable
• There’s a hard road ahead for Sun employees as Oracle moves to meet the commitments it’s made to shareholders : Once the deal goes through, expect 12-18 months of turmoil within Sun
• There are major opportunities for IBM and HP, while Sparc isn’t yet a “burning platform” there’s a definite smell of smoke in the air
• While there’s no doubting Oracle’s success in software, the company is unproven in hardware and Oracle has plenty of  challenges to focus on over the next five years without adding the saving of a hardware business to the list
• Sun brings a mixed bag of software assets, with a danger that they’ll provide more disruption than revenues
• It’s unlikely that Oracle will “mess up” Java
• It’s unlikely that Oracle will spike MySQL and if it tried to MySQL would survive
• The EU will delay, but not prevent the transaction : That is unless Ellison gets bored with waiting

It’s sad, and all that, but Sun had it coming
I’ve been an admirer of Sun technology since the 90’s. So there is a part of me that’s a little blue at the thought of such an industry icon simply being absorbed into the Oracle machine. That said; Sun had it coming – the company is reaping the rewards of appalling strategy and excessive sentimentality.

Sun has suffered from a desire to “focus” on so many things, that the result has been a lack of proper focus on anything. The adage “Sun invented Java, and then managed to make no money at all out of it” has become a cliché.  Yes, there’s a case that Java drove the Sun brand which in turn drove hardware sales – but no matter how hackneyed a cliché is, there’s nearly always a strong underlying truth to it.

Sun wasn’t in imminent danger, the company had plenty of cash, and if the latest restructuring plan had been well-executed, there was a reasonable likelihood that Sun could have found an even, albeit “smaller”, keel. But, Sun has had plenty of restructuring plans (this latest one is referred to as “Restructuring Plan IX” – or “Plan i” in aphabetic terms) – so it has seemed pretty clear to me for some time that, notwithstanding Jonathan Schwartz’s manifest talents, he was either unable to, unwilling to, or prevented from driving the kind of wholesale change that Sun needed in order to thrive in the post dot-com era.

At the strategic level Sun was too slow to respond to changes in the market – As hardware vendors divided into the “commodity players” (like Dell) or the blended hardware + software + services players like IBM (and to some extent HP) Sun managed to fudge its strategy – by partially committing to the commodidity/volume play on one hand, and by making a big play in the software market on the other.

There’s a hard road ahead for Sun employees as Oracle moves to meet the commitments it’s made to shareholders
Larry Ellison has made some powerful promises to shareholders, the most exciting of these being that he expects the Sun acquisition to add $1.5 billion to Oracle’s non-gaap operating profit in year one, and $2.0 billion in year two. Those aren’t just big numbers – they’re massive. If you just take Sun’s R&D and SG&A expenses (excluding the restructuring charges, and “impairment of goodwill and intangible assets” hocus pocus) Sun has a gross operating loss of $378 million for the 2009 financial year. So in order to deliver $1.5, we’re looking for a combination of increased revenues, and reduced costs that drive an improvement in performance close to $2 billion dollars.

You don’t make those savings by cutting the office supplies budget.

Once the deal goes through, expect 12-18 months of turmoil within Sun
Sun reported that it had 34,000 employees in it’s 2008 annual report. There have already been a number of lay-offs since then – but the total is still close to 30,000. Only recently Sun announced another round of lay-offs, which it chose, absurdly, to blame on the delay in completing the acquisition caused by EU’s investigation. Anyone who believes that those lay-offs would not have happened had Oracle been able to complete the transaction is in for a big big surprise when it does complete.

Despite being relatively close to one another geographically, Oracle and Sun have cultures that are as different as night an day. Oracle’s culture is one that is absolutely focussed on commercial success with no room for sentimentality. While Sun may have been a more “fun” place to work – Oracle is a far better run business.

There is going to be blood on the walls at Sun, because that is the only way Oracle can deliver the financial turn-around it has promised.

I expect Sun’s total employee count to be a lot closer to 20,000 than 30,000 by the end of next year.

There are major opportunities for IBM and HP: While Sparc isn’t yet a “burning platform” there’s a definite smell of smoke in the air
There’s no doubt that Sun’s recent performance has created an opportunity for the likes of IBM and HP to offer Sun customers a more secure long-term vision. The Oracle acquisition adds to the questions surrounding the long-term viability of Sun’s hardware business, and Oracle’s currently stated intent to retain the hardware business raises even more concerns.

Both IBM and HP will win business from Sun over the next two years. Even with a tie-up with the likes of Fujitsu, the future of Sparc is extremely doubtful. Sparc is certainly a great technology but it’s simply not viable over the long term. The level of investment required in order to sustain a processor business demands that you ship in volumes that Sparc simply cannot reach. Intel and AMD get those volumes from the PC / Server markets and IBM’s power processor family benefits enormously from its use in all three of the top games-consoles.

Oracle may be able to push Sparc as the “ideal” or “preferred” processor on which to run the database, and I’m convinced that Oracle’s famously “keen” salespeople will drive some volume, but I don’t believe they’ll drive enough to make Sparc sustainable in the long-term.

While there’s no doubting Oracle’s success in software, the company is unproven in hardware
This is an obvious point – but Oracle is absolutely unproven in the domain of hardware – Indeed in the past, Oracle has done a great job of battering hardware suppliers on price in order to retain margin for their software.

It’s also telling that IBM previously walked away from negotiations with Sun. IBM has far more experience as a hardware/software/services company, and part of me thinks that if IBM didn’t think the deal was worthwhile, it may not actually be worthwhile?

Oracle has plenty of  challenges to focus on over the next five years without adding the saving of a hardware business to the list
The rejuvenation of Sun’s hardware business is going to require an immense amount of management time and effort. In the meantime, the software industry is undergoing massive change, the emergence of SaaS, and cloud computing represent serious threats to the established business models upon which most large software companies base their businesses. If I were an Oracle shareholder – I’d want Larry to be focussed on the likely impact of SaaS and cloud, rather than have him figure out how to sell more tape drives.

Sun brings a mixed bag of software assets, with a danger that they’ll provide more disruption than revenues
Looking at Sun’s software portfolio, it seems that there are only a few really “interesting” bits – DTrace (beloved of kernel developers and Sysops everywhere) and Sun’s identity management technology (especially notable on account of it being profitable) to begin with. Then the two “star attractions” – Java, and MySQL.

There are other assets of course – the glassfish app server (which is unlikely to survive as a commercial offering), NetBeans (a great development tool that totally doesn’t deserve the market failure it’s enjoyed to date), then there are the assets that form Sun’s “stack” – the EAI technology (from the $387 million dollar SeeBeyond acquisition) – these will add little to Oracle’s Fusion middleware stack – which is already considerably enriched as a result of the BEA purchase.

It’s unlikely that Oracle will “mess up” Java
Oracle has been a supporter of Java, and has its own Java IDE (successor to the technology licensed from Borland some time ago). Given the JCP, and the fact that Oracle already has a clear stake in the Java middleware market, it’s hard to see how much more Oracle gets by acquiring the core technology itself. Oracle may see opportunties to drive cash out of the Java platform that Sun never did – but I suspect that if Oracle tries to hike the licensing fees for things like mobile Java the licensees may simply say “No thanks”.

It’s unlikely that Oracle will spike MySQL and if it tried to MySQL would survive
I don’t think MySQL represents a major threat to Oracle’s database business today, and it may be that by owning MySQL Oracle hopes to prevent it from becoming so – But in the mean-time, MySQL has found its way into places that the Oracle database has not. Essentially Oracle now has the number 1 market-share slot in both the commercial and open source database sectors.

I’m curious though, about how Oracle’s salesforce will view a “free database”, having been brought up on the raw steak that is big proprietary software, I doubt they’ll have much appetite for the humous that is open-source.

Ultimately, the “get out of jail” card for MySQL is the fact that it is open sourced. If all else fails, we can create a fork, call it “OurSQL” and get on with it.

The EU will delay, but not prevent the transaction

I’m really not a fan of the EU when it comes to competition regulation in the IT sector. They’ve bungled the Microsoft case time after time, and seem to me to be approximately a decade behind the times in terms of their thinking. I think the most likely outcome is simply a delay (and the opportunity for Oracle/Sun to blame more lay-offs on the EU), but there remains a small chance that  Oracle will have to hive of MySQL, and an even smaller chance that Larry will get irritated with the whole process and walk away entirely. When it comes to EU bureaucrats (and indeed Mr Ellison) you never can tell.

[Edited October 28th - to correct a glaring error - Had listed Crossworlds instead of SeeBeyond as the EAI co bought by Sun - Thanks Mr W-D]

This is an important announcement for two quick reasons – firstly the outblaze technology can bring added functionality to IBM’s Bluehouse platform, and secondly it signifies that IBM is pretty committed to investing in its  “big play” in the online collaboration space.

I reckon 2009 and 2010 are going to be busy years in terms of acquisitions – Steve Mills (the chap who runs IBM’s software business) has a track record of smart purchases, and while I don’t expect him to go crazy with the corporate credit card, I reckon there’ll be a few bargains that he just won’t be able to pass up in the coming two years.

I’m expecting to hear lots and lots on Bluehouse from IBM at the upcoming Lotusphere 2009. It’s very much something to watch…

What is Bluehouse?

Bluehouse (which is from the Lotus guys in IBM’s Software Group) is an online collaboration platform – that allows people to connect to eachother, share documents and form groups. It has a lot in common with Google’s “Apps”, and with other companies like Huddle.

Bluehouse was announced more or less a year ago at the 2008 LotuSphere event, and at the time I reckoned it was the most exciting announcement at the event. I signed up there and then for the beta program and have been a fairly regular visitor ever since.

Is it any good?

It will be.

At the time it was first announced I thought that Bluehouse had the potential to offer organisations an “enterprise quality” alternative to Google Apps and Facebook. That potential remains, but so far Bluehouse has been something of a “slow burn”. In order to get people excited about signing up to “yet another collaboration platform” you have to offer them something special, and BlueHouse isn’t quite there… yet.

At the moment, it feels a little like an empty Cathedral – Beautiful, Well built… but somehow “waiting”.

Bluehouse integrated with a slew of Lotus products (although I’d like the integration to be slicker)… and there’s a really good opportunity for IBM to deliver something that will provide a reliable, trusted, SaaS alternative to Microsoft’s small business server.

I’m off to Lotusphere 2009 in a couple of weeks… and I hope I’ll have a LOT more to say on the topic of Bluehouse then.

Oracle / BEA

James Governor’s post on the subject is worth a read – He’s absolutely right to mention the Telco market (Big OSS is a major consumer of Object middleware), but there are a couple of things that I’d challenge – Firstly while I’d agree that this move will place IBM and Oracle the leadering infrastructure vendors in SOA (although Microsoft should be mentioned) but I wouldn’t put them in positions #1 and 2# when talking about SOA generally – Home grown SOA (via PHP, python, ruby etc etc) is surely responsible for the majority of service-oriented apps that are out there today?

James also mentions a great comment by Erik Bengtson pretty much nails it in his comment on the story at InfoQ:

my take on this acquisition: OC4J, Oracle ESB, Oracle BPM, Oracle web services manager will be replaced by better BEA products, WebLogic, Aqualogic ESB, Aqualogic BPM, WL Integration, Aqualogic Enterprise Security. Oracle BAM will evolve from microsoft environment and will integrate Aqualogic BPM Bam functionality. Oracle and BEA have both licensed HP Systnet as their Service Registry, so this is an easy integration. BEA engineers will focus into Front End / Web 2.0 era..

All of that makes very good sense. But lordy! That’s not a trivial amount of stuff to do.

Sun / MySQL

Judith Hurwitz is a sceptic like many of us, Judith has watched Sun make a mess of software for a lot of years, and I understand her scepticism. I’m a little more confidant, though, that Sun can make the acquisition work and ought to be able to make it work commercially too – Although Sun really does need to work on the latter – and on explaining “how” they’ll make it work commercially.

Oh and if you like to get an “Ann Coulter”-style take on a topic – check out John Dvorak’s punditry – It’s all a conspiracy by Oracle it seems – as is global warming no doubt.

So when I say “Well I reckoned that $20.00 a share was going to be the magic number, but hey I was pretty close given it went for $19.38!” It’s ok to say “You lying little scamp, you’re just saying that…”

But I did. Honest!

/* I’ve now managed to find a back-up of the original thinkovation database, and have restored the original Oracle/BEA Post */

My wordpress incompetence aside…

I still think that this is a good thing… But there are plenty of challenges ahead of the Oracle and BEA teams. I know it’s ancient history, but I have painful memories of going to visit the NetDynamics and Netscape (Kiva) teams at Sun, soon after the “merged” app server was announced. I ended up meeting the teams separately – and got the impression that all the NetDynamics guys really wanted to talk about was how rubbish Kiva was, and the Kiva guys did the opposite..

Back to today… There are now two pretty rich and fully fledged middleware offerings in the mix;

• Oracle’s Fusion is strong but badly described, and hasn’t got much traction outside Oracle’s well understood and well sold-to customer base.
• BEA’s Aqualogic story is also strong… and better described

The problem now is …. how do you merge the two technology sets… Ellison is quoted in a Washington Post article as saying that while both companies have “numerous” middleware offerings, BEA’s line is nonetheless “overwhelmingly complementary,”.

I guess that I’d say that if I was Larry Ellison too – But it’s really not that accurate a statement…

As Micheal Meehan points out in his commentary if the deal goes through Oracle will be the proud owner of;
2 ESB products

2 BPM products

2 Portals

2 SOA stacks

2 Data integration platforms

2 Development tools

Even if you step back and let your eyes go out of focus… that’s still two pretty overlapping sets of technology.

In fairness, Oracle has a better track record than some (Sun for instance) where it comes to taking the tough decisions that are needed when merging products – and it’s going to have some tough decisions to make.

Meanwhile – IBM’s Websphere still has the #1 slot, by some margin. At best Oracle bumps up to #2 in the J2EE middleware space – And to number three if you talk about platform middleware and don’t exclude Microsoft’s .NET – Which by my (admittedly wet finger in the air) reckoning is grossly overlooked, or grossly under-estimated by most analysts.

Sun has acquired MySQL AB the Swedish software company behind the eponymous (well without the “AB”) open source database. for what the press release describes as “approximately$1 billion”.

This move is of real interest to me since I’m currently writing a “MySQL and VB.NET” how to guide (see my development blog for the first installment).

I think that on balance this is good news. Of course there are caveats – Sun has a mixed record when it comes to acquisitions – but provided that they keep faith with the user base (and I think that they will) and can keep a few of the key MySQL engineers (and I think that they can) MySQL will continue to prosper.

There are couple of other “wrinkles” two key database vendors own bits of technology that are pretty “core” to MySQL; Oracle owns InnoDB (one of the core database engines that MySQL uses), and IBM owns Solid (another storage engine). But both Oracle and IBM should be smart enough to know “not to go there” when it comes to horsing with something as popular with the community as MySQL.

Some people have asked me whether this makes MySQL a “contender” – in other words should Oracle and IBM be scared by the threat that MySQL poses to their databases? My answer is that MySQL was already a “contender” in many respects – Sure, banks haven’t flocked to use MySQL as the data store for their core systems – but gazillions of web-sites and “Web Two-do-Oh” businesses are built on MySQL.

Where it comes to existing applications, and the data that resides in them, people don’t just “swap out” one database for another – As a general rule, databases only get switched off when the apps that use them get switched off – And here’s the long-term “gotcha” for the existing DB vendors – As new applications emerge MySQL will increasingly be the database that runs them. Whether it’s SugarCRM, dotProject or WordPress… the next generation of CRM, Collaboration, and publishing applications all (more or less) use MySQL.

Some of my colleagues are still sniffy about MySQL – one past colleague even refused to call it a “Database” – insisting on referring to it as a “data-store” – And, indeed, I would have said the same right up until the end of 2005 when version 5.1 was released (which added vastly improved support for transactions, along with cursors, stored procedures, triggers and views).

MySQL is out there – in production. It sits behind millions of websites (including mine), and it’s increasingly finding itself used as the data store for custom and ISV applications.

I’m developing a client-server application for a client, they’re an all windows shop, and the client will be written in VB.NET (so that they can maintain it themselves) and I’ve chosen to use MySQL rather than add to my client’s cost by licensing SQLServer or another database.

Wouldn’t it be cool if Sun were to capitalise on this – Add a few simple API’s to make it easy for a third party application to administer a MySQL database (not that it’s that hard to do today) but with a small investment on embeddability – MySQL could be even more attractive to ISV’s.

Another commonly asked question relates to MySQL’s scalability. MySQL’s scalability isn’t really in doubt – it’s sitting behind some massive applications already – and the work on improving the performance of the different core “engines” that you can choose continues.

So.. MySQL’s adoption will grow, surely and steadily – and in a couple of years from now, some of the bigger database vendors will notice some eating away at the edges of their market share – Their choice will be to carry on competing in a market that will be essentially commodtised, or to carry on adding value over and above the core database – IBM didn’t buy Cognos for $5bn just for laughs, let’s face it.

DB2 and Oracle will retain their blue chip client-base – residing at the top of the market in terms of scale and complexity – They’ll just begin to notice that the number of “little apps” that are deployed on their technology will first stop growing as quickly as it once did and will then begin to slow.

The biggest potential loser, I reckon, is Microsoft’s SQLServer – SQLServer is a tremendously sophisticated, scalable and fast database and for 99.99% of applications it’s every bit as good as DB2 and Oracle… but Microsoft hasn’t been able to get past the “toy database” stigma – which is really very very unfair – and now there’s a free database that can also cater for the vast majority of applications – MySQL.

This is the key point – So what if MySQL can’t, yet, scale to a gazillion writes/second… the number of applications that require that kind of scale is so low that it can almost be written off as a statistical error. Steve O’Grady at Redmonk blogged on this topic this morning and produced a quote that I’ve never heard before – Apparently someone at Oracle once said “MySQL is a Toyota Corolla to our 747″ in order to disparage MySQL… what an utterly stupid thing to say – As Steve points out – there are many many more Corollas kicking about than there are 747’s and very very few of us would choose a 747 to nip down to the shops or to deliver goods to our clients – And just as the corner shop is far more likely to choose a Corolla over a 747 for the delivery – it seems that the budding e-commerce and social networking sites are choosing MySQL’s Corolla over Oracle’s 747 to build their businesses on.

News just out that Oracle has made a bid for BEA, offering $17 dollars a share – which represented a premium of 25% over the company’s closing price yesterday. The bid values BEA at close to $7billion.

BEA’s reaction has been (predictably) to say the offer is too low – And I think they”re right, but the board has come under pressure to sell up from a few shareholders, notably the investor-activist Carl Icahn who has build up a stake of 13.2 percent.

Personally I think the offer is too low – I think $20 would make a nice round number…

No surprise
This move isn”t likely to come as much of a surprise to followers of the industry. There have been hints and rumours about an Oracle/BEA tie-up for a long time. Oracle and BEA have been engaged in pretty fierce competition in the middleware market – With Oracle agressively targetting BEA customers with “migration deals” over the past few years.

In a nutshell

If the acquisition eventually goes through – and the offer first has to be accepted, and then there may be some regulatory/competition hoops to jump through as well, I think this move is certainly a good one for Oracle, as it provides the company with a lot of additional technology muscle in the middleware space – Not to mention an impressive installed base.

I also think that it would be good for BEA, its customers and its engineers. BEA simply does not have the horsepower to “out-innovate” IBM (Websphere), Microsoft (.NET) or Oracle (Fusion) in the platform middleware contest. BEA’’s R&D spend overall represented a fraction of the spend of the likes of IBM and Oracle on their competing products.

What do I think?

There”ll be a fair amount of beating of chests over this – Plenty of BEA die-hards will feel that a deal with Satan would be preferred to a deal with Oracle. And then there”ll be a lot of speculation about how the BEA technology will “fit” into Oracle’’s middleware portfolio.

It’s true to say that historically, big middleware products don”t “combine” easily. A lot of people still remember the monumental screw-up that occurred when Sun acquired both Netscape’’s Appserver (Kiva) and Net Dynamics – Two deeply different, J2EE incompatible application servers and tried to weld them together. There’’s also the question of the overlap between the BEA portfolio and Oracle’’s good but poorly explained Fusion middleware.

But Oracle isn”t SUN – Oracle doesn”t need to be told that there’’s “overlap”, or that it will be a “challenge” to pull the two product-sets together, Oracle knows this already. The fact that both technologies have an underpinning in Java and EJB means that there will be some relatively clear points where integration (or even the swapping out of one element for another) will be relatively straightforward. BEA’’s product set would bring new functionality to fusion, as well as a huge installed base, and a lot of engineering know-how and intellectual property.

I will confess that part of me is a little sad; BEA is one of the longest standing independent middleware vendors in the business – Originally formed to acquire and then market the Tuxedo middleware platform back in the mid 1990′’s. Tuxedo was the first distributed middleware product I ever used as a developer, and it has taken the big J2EE products nearly a decade to come close to Tuxedo’’s richness of function, performance and ease of use – Indeed on two of those factors I’d still argue that Tuxedo has an edge. BEA was the first major player to make a credible play in the J2EE market – by buying WebLogic in September 1998 (for 192.5m) when BEA’s share price as a little over $20, BEA shares skyrocketed during the dot-com boom to over $160 dollars, but haven”t seen $20 since the beginning of 2002.

BEA’’s problem, however, was that it was suckered into an all-out battle with IBM’’s Websphere back in 2002. At the time, IBM had made a massive commitment to turning its Websphere App Server into a complete middleware platform – And was piling a massive amount of money into building it out. I estimate that IBM’s annual investment in the Websphere platform exceeded $500million, more than three times BEA’s R&D budget at the time.

What bothered me then was that in 2002 WebLogic was a better application server (IBM’’s was fraught with problems at the time) and BEA should have taken a different path rather than trying to pitch its resources against IBM’’s. Perhaps if BEA had majored on “having an app server that works” – and established the right kind of partnerships (remember Tuxedo’’s massive installed base is a function of Tuxedo being embedded within so many key third-party apps) history might have been different.

Since then, BEA has gone to market with a host of innovative ideas and excellent engineering – But by 2004 the WebSphere core had made leaps and bounds, and IBM’’s huge commitment to the platform had created a level of momentum for IBM that BEA simply could not overtake. Today Websphere represents a middleware platform that is unmatched in terms of the breadth and depth of the services that it provides, and IBM’s investment in SOA over the past three years has eclipsed BEA’’s ability to recover mind-share.

Oracle’s entry into the middleware market was, perhaps characteristically, enthusiastic – to the point of ferocity. Oracle has been seriously committed to being a major infrastructure player and has been competing “enthusiastically” with BEA for the past couple of years – To the point that Oracle talks more often about its market share relative to BEA than it does about IBM WebSphere. Oracle has launched numerous “BEA Attack” programmes designed to lure BEA’’s customers to its middleware – and has had some success.

In a Nutshell

• The price is too low – I”m not a financial analyst, so I can”t explain why – and you”d be a fool to make an investment decision on the basis of this, I think this in part because I believe that the benefits to Oracle of this transaction would be worth more than the current offer.
• Oracle could benefit significantly from a tie up like this
• BEA’s engineers will benefit
• And I think BEA’s existing customers would too.

My advice to BEA customers is … Keep on using the technology, it’s good and it works.

My advice to Oracle is … If the transaction does go through make sure you manage the messaging and the execution of the merging of the two product families very carefully; And perhaps use the transaction to re-build your Fusion messaging, because it’s still far too complex.

If you”re a Websphere user… perhaps you can be a little smug for a while, and enjoy the inevitable challenges that a tie-up like this will create. Over the longer term, this deal could also benefit you – IBM works best when faced with competition.