SeeBeyond says don"t fret over Sun acquisition

04.07.2005
Von Michael Crawford

Middleware vendor SeeBeyond Technologies Corp."s Australian unit has told customers "not to fret" over Sun Microsystems Inc."s offer to acquire the company for US$387 million.

SeeBeyond Australia technical services director RayGear said it was too early to provide details or a time frame of when the acquisition will go ahead, but did say customers can expect "a stronger company all round".

At the announcement last week, Sun chairman and CEO Scott McNealy said the company is "flush with cash", and had been looking for a suitable acquisition to attack the US$5 billion enterprise application space.

Sun is likely to make other middleware acquisitions. "We"re certainly still quite flush with cash to make further purchases; stay tuned as we continue to redefine this strategy," he said.

The purchase is expected to close in September and Sun"s chief financial officer Stephen McGowan said there was already a solid working relationship between the two companies.

Locally, Sun was unwilling to comment but Ovum research director Christine Axton said Sun has a history of failing to deliver on previous software acquisitions.

Axton said the merging of Netscape with NetDynamics was fraught with difficulty and the acquisition of Forte also failed.

However, she said this acquisition could be very different as the two companies were working to integrate their solutions prior to the acquisition announcement.

"Although Sun still has money in the bank from its glory years, it"s taken some serious knocks in terms of revenue over the last couple of years, particularly in terms of product sales and services," Axton said.

"The moves it is making now will need to have an impact darned quickly, the application platform market is rapidly becoming commoditized and consolidated; it is an intensely competitive market."

IBRS analyst Chris Morris said the acquisition is a good deal for both parties. The acquisition fits with Sun"s product plan and provides it with the integration backbone the company really needs.

"I think it"s a good deal for both parties. SeeBeyond has had a tough time in the market, so I think this is going to give it ongoing revenue for R&D to play against the big competitors," Morris said.

Current Analysis principal Shawn Willett said Sun has finally made a logical software acquisition adding that it is a great move.

"Sun has had no integration capabilities and this fills an obvious hole. But more importantly, if Sun wants to get into the emerging enterprise service bus, SOA, composite application space, this gives it a good head start," he said.

Australian financier Orix, which is currently using SeeBeyond"s Integrated Composite Application Network (ICAN) version 5.05, is optimistic about the acquisition.

An Orix spokesperson said the company expects to benefit because Sun is a good fit with SeeBeyond.

"We [Orix] are optimistic about the purchase because the SOA, Java and J2EE products and strategies from Sun are a good fit with our current and future plans," the spokesperson said.

"The increased resources and research Sun can inject into the product will be good for both SeeBeyond and Orix."

ICAN software runs natively on Java 2 platform, Enterprise Edition (J2EE). ICAN will become the sixth piece of Sun"s Java Enterprise System and will be known as the Sun Java System Integration Suite.

George Weston Foods general manager of business systems, Tim Hume, said he anticipates SeeBeyond being a better product under the wing of Sun due to the amount of research and development that would be put back into the SeeBeyond product.

"It worries me when a large company buys a comparatively small company because that sort of purchase makes you think the relationship will change," Hume said.

"We are quite a leading edge user of the ICAN version 5 suite, when very little companies in Australia were using it we adopted it 18 months ago, and we did have teething problems but that has been worked through. See Beyond is small enough to work with to resolve issues - sometimes without charge. If we bought middleware through IBM it would only engage us on a consulting rate.

"What I have seen in the past is that Sun is nothing like a Computer Associates, which will buy products and let them wither on the vine - Sun will take advantage of SeeBeyond products and develop them but it is worrying with big players getting into this space."

SeeBeyond has 2000 customers worldwide.