Sale of BEA Systems

Implications: BEA is a company with sticky products, satisfied customers and its employees are among the brightest in the computer industry.  Perhaps, due to the value it brings to a wide range of industry segments, the company is best off staying independent.

Analysis: Sale of BEA Systems is making another set of round these days. It appears to be serious this time and for good reason. The stock price has stagnated since 2001 and the few fluctuations since then have been largely driven through rumors or marketing hype.

BEA is a company with sticky products, satisfied customers and its employees are among the brightest in the computer industry. Its capabilities have a wide ranging impact for a number of industries and makes for a very good acquisition candidate. IMHO, the top ten potential acquirers and benefits to them are

1. SAP – replaces the NetWeaver stack and brings quality and robustness back to SAP product suite that it has been losing since moving to the Java stack.
2. Oracle – boosts the Fusion product line and moves the Oracle mindset from database-centric to net-centric.
3. HP – provides the ability to compete with IBM in the fast growing J2EE applications market.
4. Microsoft – announces to the industry that Microsoft is serious about their multi-platform strategy.
5. EMC – has the potential to accelerate the virtualized applications market.
6. IBM – removes the only competition to WebSphere (not good for the industry)
7. Intel – this is a stretch, but with the operating system not commanding a premium in the server-centric world, Intel could effectively remove its dependence on Microsoft.
8. Cisco – the original hardware networking company could make a giant leap in providing network-centric software applications.
9. SUN – Clearly a good marriage as the company is focusing more on JAVA
10. INFOR – plugs the middleware gap and positions them solidly against Oracle and SAP

The acquisition of BEAS also makes very good sense for top system integrators who are not able to effectively compete with IBM Global Services due to the IBM’s software portfolio. I want to make a note here about the Indian software engineers, also known as the heartbeat of BEA Weblogic, that an acquisition by an Indian system integrator(Wipro, Infosys) can propel them ahead of the other Indian competitors.

Finding the right home is going to be important for BEA products and its customers. Going back 10 years, the best application server in the industry was NetDynamics and not Weblogic. Sun made the first move and bought the leader, while BEA was only few days behind and had to settle for the number two player. Weblogic, however, prospered while NetDynamics crashed and burnt primarily because of the application-server culture that permeated BEA’s sales, marketing, support and engineering. BEA remains a solid company and, with the right backer, has the ability to scale the highest mountains.

Perhaps, due to the value it brings to a wide range of industry segments, the company is best off staying independent.