What's wrong with an independent BEA?

Now that the Oracle offer for BEA has lapsed, Larry Dignan lays out various scenarios for the company including one where BEA stays independent.

He says : This option is arguably the worst. As an independent company BEA is now wounded."

To which I posted a response on his blog:

"As a proxy for buyers, not investors let me ask - what is wrong with an option 4 - an independent BEA? We have created this hysteria that independent sw companies are doomed. Where is most of the innovation and productivity coming from in the industry - not the big guys, but the Google's, the salesforce's. We should be pushing the guys in the middle like BEA to benchmark themselves more against the innovators, not push them to get consolidated in to the expensive laggards."

Update: Several financial analysts beat up on BEA. You would think these days the only way to increase shareholder value is to sell out. Next time I hear one of the analysts hype up the SOA and middleware market I will ask them - then how come you did not have much faith BEA could keep growing and generating value that way?

Comments

[JasonC]

Isn't the issue here the degree to which the big players will encroach on BEA's space? You note analysts hyping growth in middleware and SOA. The CRM and BI markets are still growing strong, but it seems that buyers are increasingly expecting that those "niche" offerings come from and are integrated with their SAP, Oracle, etc.

Hyperion, Business Objects, et al thrive so long as customers by and large are comfortable getting their BI from stand alone vendors. Those companies get acquired in part as a market share battle but also because of changing customer expectations on where they get their BI tools. (Repeat this paragraph a few times by changing BI to CRM, SCM, Retail, etc and listing the appropriate niche vendors)

IBM, Oracle, Microsoft, SAP, all do middleware and SOA, along with platforms and business apps. That to me spells trouble for BEA.

Salesforce.com? Until now they have been a leader in a niche into which the big guys have not been encroaching. That changes with SAP BBD and Microsoft's Titan (plus the things Larry and Co are doing, despite the fact that there is no money to be made there). To read the postings from some of your fellow EI bloggers Salesforce.com's days may be numbered as well.

[vinnie mirchandani]

Jason, thanks for comment.

So just because MISO start to focus on a market segment every one else should give up and sell out? Well, then let's start putting pressure on Google, VMWare, Yahoo, NetSuite and every other sw company etc to pack it up also and sell. And may be even SAP and Oracle to sell out to IBM and Microsoft since their relative size is marginal.

We have a duoploy in telecom - let's try to get there with software also...

[Aravind B]

Its not when MISO starts to focus on a market segment but when MISO gets good at that segment. BEAs middleware seems to be marginally better than the others(even that is debatable). Marginally better doesnt warrant suistainable revenues or differentiation, what BEA can do everyone else can or others will just copy it. Application platform technology is not rocket science.

[vinnie mirchandani]

Aaravind, you know from competing from Microsoft there is very little new and innovative in MISO stuff. Most of the stuff is in release 8, 19, 12 - has been around for a while and tweaked for 2-3 decades. Not rocket science any more.

Besides, if size is a criteria for which companies should be allowed to sruvive, I would argue Oracle's infrastructure revenue is puny compared to IBM or HP's infrastructure sw and outsourcing revenues...so should we pressure Oracle to sell out?

[Neil Ward-Dutton]

Vinnie, thanks for the comment on the mwdadvisors.com blog on this issue. Good to see someone out there prepared to question the easy line.

[Aravind B]

When you are saying MISO doesnt innovate ofcourse they dont w:r:t your MAGIC framework but they surely do in the middleware space as good as BEA can. Take a look at SAPs Virtual Machine Container technology or Composition environment. IBM on other hand is responsible for best open source IDE which is now the industry standard (Eclipse) and also contibutes heavily to open source "free" application servers like Geronimo.

I think the question is are u in a market, segment and on the curve where you can keep innovating to make a differentiation, middleware in my opinion is just not that market. And if you are really innovative enough you should have made enough money to diversify , today BEA seems to be just another middleware company.

Well if Oracle only did infrastructure services and if it were puny and they can only innovate as fast as or only slightly faster than the bigger players then its better to sell.

[vinnie mirchandani]

Aravind, infrastructure to me is far broader than just middleware and data base...it is virtualization, systems management, network management,asset management,whole range of ITIL components...SAP and Oracle clearly are at the heart of all that but provide few of the tools or services for most companies in that space.

More broadly, my point was BEA or Tibco or whoever are sovereign companies. Let them decide for themselves what is right for their shareholders not just put peer pressure "your time is up"