Can You Say Buy-Buy?

Maybe IBM will buy troubled Computer Associates International, building its systems and network management base and picking up CA's mainframe software business. Or maybe it will chuck its "I'll stay out of applications" stance and buy Siebel Systems. Or even SAP. Maybe Oracle will buy BEA Systems to bolster its application server business and build on BEA's newfound rich-client religion.

One analyst said infrastructure players under pressure to grow have four choices. They can buy their way "up the stack" into applications, as Oracle is attempting with PeopleSoft. That scenario turns Siebel and Lawson Software into potential targets.

Or they can pony up for professional services know-how, as IBM did with PricewaterhouseCoopers. Targets here include global systems integrators--Cap Gemini, Accenture, EDS--as well as regional players. Or if they are in the .Net or J2EE camp, they can place bets on the other, making targets of Sun Microsystems and BEA on the Java side and any number of small .Net players.

Finally, they can gamble on open source, as Novell did with SUSE. That makes Red Hat a potential buyout candidate.

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These companies all declined to comment. But as the failed Microsoft-SAP talks show, none of this is easy"and not just because of the complexities of melding products and cultures. Regulatory concerns are huge.

Microsoft disclosed its talks only because it feared they would come out as the U.S. Department of Justice opened its case against Oracle's hostile PeopleSoft bid last week. Oracle can say Microsoft's move supports its contention that enterprise applications remain competitive even if Oracle gets PeopleSoft.

For solution providers, a combined Microsoft-SAP would have had interesting implications. First, it could not even pretend to be a friend to other ISVs. "SAP has a huge number of professional services people focusing on implementation," which could lead to conflict with Microsoft integration partners, said Ken Winell, CEO of Econium, Totowa, N.J.

Manuel Villa, president of integrator Via Technology, San Antonio, said SAP would have given Microsoft enterprise credibility. "If Microsoft really wants to go after the enterprise universe, it will have to work with customers [and partners] the way SAP does." That approach could be characterized as very high-touch vs. Microsoft's volume focus.

Ron Zapar, president of Re-Quest, an Oracle partner in Chicago, said he found Microsoft's move to buy SAP hypocritical. "This thing about them making statements about the Oracle acquisition and then turning around and doing this [is a bit much]. Oracle bid on PeopleSoft. Microsoft reacted."