by Domestic Avalanche

Created on: April 27, 2008

The purchase of BEA Systems by Oracle come as a culminating move after years of courtship. Both the companies are old stalwarts of licensed software products. Considering the way Oracle has been pushing its strategy for a while, it comes as no big surprise. Does this render licensed software obsolete or is Oracle betting for a brighter future for licensed software? Well, the answer to that question is a bit complicated.

My first response is that licensed software, in its pure form is obsolete. But does this end licensing of software? Well, no. The licensing of software have been evolving over the years, especially affected by the open source movement, in such a way as the way the customer is billed has changed. Of late, the business model had moved on to paying for support and services rather than for the software itself. Customers continue to pay for these services for many years, long after the purchase of the product.

But, the acquisition of BEA Systems by Oracle does not constitute as a big milestone against this transformation process of licensing software products. This comes just as the next logical step of Oracle's vision of Oracle Fusion products. The acquisition of Peoplesoft and JD Edwards aided immensely to these process and BEA products have been extensively used in the implementation of these suites for a long time. For example, a typical Peoplesoft Enterprise system uses BEA Tuxedo for its application servers and BEA Weblogic for its webservers. Thus, BEA products have been very ubiquitous with the Fusion products that it made all sense for Oracle to complete its portfolio in the Service Oriented Architecture(SOA) approach that it has been pushing for the future.

In essence, Oracle would continue selling licensed software in the form of all these accumulated products, but what it is counting on is the huge revenue that these products generate through services and support. This news should be read in conjunction with Sun Microsystem's acquisition of MySQL. Sun has for long championed the software as a service model and by buying MySQL, it is getting a company that pretty much gives away its products and charges for support. There are also rumors of IBM and SAP coming together to be able to challenge their competitors in a better way.

In conclusion, all these news means only one thing: services-centric model of software business is catching up. Oracle can now deliver a seamless product line in Enterprise solutions with all the components from within its umbrella and it can better coordinate the services and support division for these systems. Thus, licensed software is not getting obsolete, but it is evolving and at first glance what may seem as a free product is making the same or more money out of services and support. Welcome to licensed software 2.0!

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