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SAP snaps up database wars survivor Sybase for mobile apps push

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13th May 2010
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One of the last survivors of the database wars of the 1990s surrendered this week as Sybase agreed to be acquired by applications market leader SAP. 

Back in the 1990s, a vicious sales and marketing war was fought among the emergent relational database vendors. Of the independent database providers, frontline conflict was focused on four main players: Oracle, Ingres, Informix and Sybase. In the wake of this move by SAP, only Oracle remains as an independent firm. Ingres fell to ERP vendor ASK, which in turn fell to Computer Associates while Informix was bought by IBM. 

Back in the 1990s, SAP's initial success was based on its use of the Oracle database, a dependency that was repaid by Oracle launching a competitive range of applications. At the time, it was often speculated that SAP would purchase its own database in order to lessen its dependency on Oracle, but in the event it chose to extend database support to the likes of Informix.  Ironically Sybase missed out on much of this due to a combination of technological issues and personal differences with some of Sybase's then management team. 
Over a decade later, SAP has finally made a move on one of those database veterans with a $5.8 million acquisition, but in 2010 the attraction for the German firm is Sybase's skills and technology in the wireless and mobile fields.  With Sybase, SAP adds software that helps corporate customers run applications on mobile devices. SAP believes the mobile Internet will be 10 times larger than the desktop Internet with an increasing amount of work conducted remotely through connected devices.
“This will literally connect the shop floor to the corner office,” said SAP Co-CEO Bill McDermott. "This is a game-changing transaction for SAP and Sybase customers, who will be better able to connect their employees with key functionality and information from anywhere and make it easier for companies to make faster, more informed business decisions in real time.”

Three pillars
“This falls right in line with our three pillar strategy of on-premise, on-demand, and on-device software,” said Co-CEO Jim Hagemann Snabe. “Now, with the acquisition of Sybase, we will secure our leadership in on-device, further cementing our ability to bring information to users anytime, anywhere, and on any device. As mobile applications for consumers have changed the world, the way people live and communicate mobile applications for the enterprise will have an equal profound impact in the way they work. We want to make sure that SAP solutions can be accessed from all leading mobile devices.
“Fundamentally we believe that the stack as we know it today is being changed. You see hardware moving into the Cloud and you see databases moving into memory. And this gives us opportunity for us to change the shape of that stack and move our strategic position forward. And this acquisition is clearly one that allows us to do that. Combining applications and data closely gives us huge advantages because that significantly increases the value proposition for our customers.”
The deal does also give SAP some skin in the database market, albeit significantly smaller than that of Oracle, IBM and Microsoft. According to research firm Gartner, Sybase has only 3% of the database market, compared to 19% for Microsoft, 24% for IBM and 43% for Oracle.  “We are the number one in investment banking world and in most of the financial world, stock exchanges, and insurance companies. We actually believe, especially in the emerging markets, we’re extremely, extremely competitive,” said Sybase's Chen. 
For its part, SAP does see merit in having its own database technology in-house. “We will continue to innovate the database and grow the license and maintenance revenue stream coming from it,” promised Snabe. “Moreover, with the database business comes technological know how and market leadership in an area of column storage databases which is used for advanced analytics. This complements the in-memory technology that we in SAP are using to provide real real-time analytics. This way Sybase will help us accelerate the delivery of a next generation platform for business intelligence and planning optimising applications.”
Geek play
Analysts were not quite as convinced. “This is a total geek play. [SAP chairman] Hasso Plattner is obsessed with the idea In Memory is a wave SAP can ride. Sybase has some very solid assets in that space,” commented James Governor of analyst firm RedMonk. “I am less convinced of the rationalise behind the iAnywhere purchase. While its true mobile is a huge opportunity, Sybase's mobile assets were designed for the pre-Cloud era. It will be interesting to see just how relevant those assets prove to be.”
Others had expected SAP to be more likely to make a Cloud-based acquisition rather than Sybase, but could see benefit in Sybase's mobile expertise for SAP. "Its apps rivals all have mobile plays, but nothing offering the potential breadth Sybase might enable," said China Martens of The451Group. "SAP can also point to a significant expansion around in-memory know-how although it appears to be positioning things at present that Sybase will benefit from SAP's in-house developments rather than the other way round. That also seems to be the case with analytics, with SAP applying its Business Objects technologies to Sybase's offerings. The only piece of Sybase's business not pointed out is its PowerBuilder and PowerDesigner development tools - might SAP look to sell them off or could they prove useful as the company explores entering the platform-as-a-service arena?
"We think SAP is wise to state from the get-go that it's not planning to push customers running its apps on third-party databases, notably Oracle, to adopt Sybase. We see in-memory database as the primary way SAP will look to wean customers off Oracle. It's interesting to note that SAP and Sybase weren't always the best of pals. We still remember the stand-off between both companies back in the 1990s when SAP apps didn't run optimally on Sybase's database because of lack of support for row-level locking. That situation wasn't resolved until 1998 and even today not all of SAP's apps are certified to run on Sybase's Adaptive Server Enterprise (ASE) database."
Inevitably some of the competitors were none-too-impressed either. "I see this as a very risky move for SAP," said Bruce Richardson, chief strategy officer for Infor. "While it does give SAP some strength in financial services, the mobile market is very early in its evolution. I'm waiting for the juicy Larry Ellison quote, he's got to love having SAP show up at a gunfight with a squirt gun."
The takeover is also the first tangible action of the new SAP management team of McDermott and Snabe who succeeded the ousted Leo Apotheker earlier this year. With some notable exceptions such as BusinessObjects, SAP has avoided major acquisitions in stark contrast to arch-enemy Oracle which has spent billions on takeovers in recent years in a growth through acquisition push but Snabe was keen to emphasise that the Sybase acquisition does not represent a shift in policy to emulate the Oracle approach. 
“It's very important to make a clear statement that we fundamentally don’t believe in buying the entire stack,” he insisted. “We believe in choices for companies and we believe in focusing our attention on the right layers of the stack.”
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