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When Oracle (Nasdaq: ORCL ) and Sun Microsystems (Nasdaq: JAVA ) unite, you know that things are changing in the enterprise software business. That's why I'm excited to report on the view from inside that industry.
Last night, I got on the horn with Vivek Ranadive, CEO of Tibco Software (Nasdaq: TIBX ) , for a candid rundown of what this merger of not-quite-equals means for his business -- and for Silicon Valley at large.
Oracle just did Microsoft a favor
First off, Vivek explained that Sun chairman and co-founder Scott McNealy was an old friend who had helped him get into business years ago. Seeing Sun made into a footnote in computing history saddens Vivek on a personal level.
That said, Tibco is one of many companies that should benefit from this move, in Vivek's opinion. "People don't want to put all their eggs in the Oracle basket," when designing their IT infrastructures and systems, which presumably should drive many traditional Oracle Fusion shops and Sun Enterprise Service Bus accounts to look at third-party alternatives.
That's a positive for Tibco, International Business Machines (NYSE: IBM ) , and Microsoft (Nasdaq: MSFT ) . There are other rivals in this space who will benefit as well if you accept the premise that all-Oracle IT shops -- from bare-metal hardware to end-user applications and everything in between -- could be a bad business decision for its clients.
What happens to Java?
"The Java community is going to be concerned," Vivek said. Oracle CEO Larry Ellison "likes to buy commodity has-been companies" and dismantle them by gutting R&D efforts on the newly acquired products. "I'm sure it'll be highly accretive at the start, but it's the end of innovation." And with Java under Oracle's control, that puts SAP in a difficult position -- the German business intelligence specialist builds most of its software on the flexible and nearly hardware-agnostic Java platform. That's another source of nervous customers who might jump ship and go to Microsoft or Tibco.
Oracle is also buying into a slew of open-source projects under Sun's wing, including database platform MySQL, the OpenSolaris operating system, and MS Office competitor OpenOffice.org. "Oracle and open source?" Vivek chuckled. "That's an oxymoron if I ever heard one!" The database giant sure doesn't have much of a track record in open-source support, and the survival of these product lines may be in question now.
Of course, the server hardware market changes dramatically with this acquisition. If a corporate customer is looking to refresh a data center built around Sun systems and running Oracle databases (a popular combination), that's a monolithic experience now. And the "superstore" concept has historically not worked out so well, whether it's about CA (Nasdaq: CA ) trying to be every computing solution to everybody, or Citigroup in banking. Why would it work out better for Oracle? IBM is the shining exception to that rule, but "there is only one IBM," if you ask Vivek.
The obvious counterargument to Mr. Ranadive's bullish view here is that some companies would prefer tight integration and one-stop shopping. But customers who really want the whole top-to-bottom stack in one package might have gone with IBM to begin with. Those who kept the server and software vendors separate on purpose could be happier elsewhere now.
"Cisco Systems (Nasdaq: CSCO ) -- I think it helps," Vivek said, "because they are a new entrant in the server business." It's a fresh alternative tied only to networking structures, with no legacy enterprise-class software offerings to bog it down or dilute the value of a Cisco server.
To sum up the new situation, Vivek said: "I don't wanna toot my own horn, but I feel like we are big winners in this. Because people will gravitate towards a third party that can arbitrate between all these different factions -- arbitrate between Microsoft and Java -- and so we feel that this will help us in all sorts of ways."
Tibco will "aggressively go after Oracle customers -- all of our mutual customers" now that the competitive landscape has changed so dramatically. And Vivek doesn't think it's going to be too hard to convince many Oracle customers to trade in their middleware platforms, which is the segment in which Tibco competes. "They have four or five middleware products [including Fusion, the new Sun stuff, JD Edwards, BEA, and more], so which one are they selling?"
Food for thought, indeed. I'm a longtime fan of Tibco's unique market position, and I agree with Mr. Ranadive's positive assessment of the new situation. Oracle may be the big spender in this scenario, but Tibco, IBM, and Microsoft are the real winners.