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Wednesday, March 30, 2005

Why Oracle bought Oblix

It's gratifying to see Oracle endorsing several aspects of our analysis of the SOA management market with its purchase of Oblix this week. Here are three of the findings we published in our SOA Management 2005 Report, which we published in early February:

  • We rated Oblix as one of the sector leaders, citing its "rapid sales success" with the SOA management products it acquired in its purchase of Confluent Software a year previously.
  • We rated Oracle as "Not there yet ... [it] has yet to flesh out its offering."
  • We made the firm prediction that "in a year’s time, at least two or three of [the vendors] listed here will either have merged, been acquired or gone out of business."

We were conscious that we were going out on a limb in naming Oblix among the leaders in the SOA management sector. What clinched it in our minds was the evidence of significant sales successes it had been quietly striking since it acquired Confluent, including substantial projects at blue-chip names such as AG Edwards, Cisco and the Federal Aviation Administration. Although its revenues were not as large as some of the other better-known names among the four companies we picked as leaders, it was making up lost ground at a sufficiently fast pace to justify its inclusion.

So Oracle has done well to pick up Oblix. The improving fortunes of its SOA management line had not yet been noticed by other analysts or even by competitors. Unless you'd been extremely close to Oblix or bought our report, you wouldn't have known the information we reported, and would probably have underestimated its strengths in SOA management.

Indeed, a lot of the coverage of the acquisition glossed over the SOA management angle, especially those articles that came out before Oracle started talking about the SOA management capabilities in its conference call yesterday. Certainly, the main reason for buying Oblix is its ID management products and customer base. Federated identity management has been a gaping hole in Oracle's product offerings that the Oblix acquisition now plugs. But SOA management is an important part of that story too.

One of the things that Oblix realized after it got down to business with COREsv (its product name for the Confluent technology) was that taking a service-oriented approach is a very smart way of handling complex ID management. As we noted in the write-up of Oblix in our report, the vendor has been in the process of re-architecting its entire product set as reusable web services that can be managed using COREsv — the aim being to identity-enable its web services and to service-enable its identity management offering. In doing so, it was not striking out on its own. Netegrity, just before its acquisition by Computer Associates closed, outlined a similar roadmap, which CA has continued to pursue. This is becoming de facto behavior in the identity management sector — probably because it's the only practical way of managing federated identities that straddle multiple security domains.

So Oracle bought Oblix not merely for its identity management capabilities, but also because it is well on the way to service-enabling those capabilities. In addition, Oracle got to plug the other major hole in its product set, namely the total lack of any policy-based SOA management capabilities. (And if Oracle really did pay less than $100m, as some analysts are claiming, then it got an excellent deal). I was writing about layers of SOA in a recent posting, and one of the interesting things about Oracle's move into SOA is that it bought into the upper layers, with its astute purchase of BPEL specialist Collaxa last year, before it had filled in the middle layers. In a sense, it is still working down the stack, because it has now added policy management and monitoring but doesn't have a messaging layer. Expect an acquisition of an ESB vendor or similar to rectify that in the coming months.

All this puts a lot more pressure on Oracle's peers. IBM, HP and BEA have all been ambling along without worrying too much about their lack of shipping SOA management products, while CA only just started shipping its product. Now at a stroke Oracle has suddenly swept past them. I suspect we'll see more acquisitions over the next several months in the race to catch up.

We are re-issuing our SOA Management 2005 Report next month to update it with these latest moves as well as developments at some of the other vendors. Current buyers will get free access to that new version, and will also avoid the small price hike that will accompany the release of the update. So if you want to be properly and cost-effectively informed about the players in the SOA management space, I recommend you secure your copy today. Meanwhile, here are links to some of the online coverage of the acquisition elsewhere:

posted by Phil Wainewright 3:11 PM (GMT) | comments | link

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