With less than a quarter of the year gone, Oracle Corp. has created something of a storm in the telecom sector with two Service Provider Information Technology (SPIT) acquisition deals -- for Acme Packet Inc. and Tekelec -- that appear to have network functions virtualization (NFV) as a key buying criterion. (See Oracle Snaps Up Tekelec.)
With those two deals, Oracle will bring on board: the leading session border controller (SBC) player in Acme (along with significant capabilities in IPv6 and SIP traffic management); Diameter routing capabilities from both companies (though it seems Oracle plans to move forward with Tekelec's technology there); one of the leading policy control platforms (the former Camiant PCRF from Tekelec); and subscriber data management (SDM) software (again from Tekelec).
That signals clear intent from Oracle CEO Larry Ellison and Bhaskar Gorti, senior vice president and general manager at Oracle's Communications Global Business Unit, that the enterprise software giant sees the telecom sector as a key driver of new sales growth.
So where might Oracle, or indeed some of its rivals such as IBM and Cisco Systems Inc., turn next to further augment their telecom applications arsenals?
The company deemed most likely to be in Oracle's M&A firing line is unified communications platform specialist BroadSoft Inc., which saw its share price spike 4.6 percent Tuesday on the expectation that it may be a takeover target, whether for Oracle or any other company wanting a piece of the next generation communications applications pie.
"From our perspective, it’s reasonable to view BroadSoft as a viable M&A candidate," noted George Notter, an analyst with Jefferies & Company Inc., in a research note issued early Tuesday.
Notter noted that it's unlikely BroadSoft's management would be inclined to sell at anything near the current valuations, but strategically "the company fits right into the emerging theme of Service Providers getting more aggressive about applications and service creation (as opposed to their traditional 'pipes' mentality)," he wrote.
The acquisition prospects aren't so bright for Sonus Networks Inc., though. While it is the second largest player in the SBC market, behind Acme packet, "it’s not clear to us who the logical acquirer would be," noted Notter.
The analyst also suggested that Oracle's latest foray into the SPIT space "should create some modest incremental concerns in places like Alcatel-Lucent, Cisco and Juniper Networks Inc.
"While we don't see any substantive direct competitive threat from Oracle materializing over the short- or intermediate-term, these vendors are likewise targeting higher-layer functions within telecom networks," he noted. (See Cisco Adds Policy Smarts With BroadHop Buy, Juniper Buys Itself a Security Booster, Juniper Taps Riverbed for Enterprise Help and Alcatel-Lucent Has a Top-Secret SDN Startup!.)
— Ray Le Maistre, Editor-in-Chief, Light Reading