Oracle’s decision to purchase Tekelec, having just done the Acme Packet deal, seems to be indicating that the software giant has something in mind. The question is what that something might be, and it’s a pressing question because of Oracle’s size and potential in the network market.
The obvious possibility is that Oracle is looking to expand its portfolio in support of UC/UCC. The fact that it’s picked up two companies in the VoIP space actually reinforces this possibility. You could argue that Acme had some history in deep packet inspection, which has a broader mission for the future—including support for NFV as I noted when I blogged about the Acme deal. While Tekelec has created hosted versions of some of its voice functions, that trend isn’t really linked to NFV at this point, simply because we don’t have any NFV architecture against which this stuff could deploy. Content delivery networks were on the target list for NFV in the white paper, you may recall, and we’d been seeing a shift of CDN implementation from appliance to cloud before NFV was even dreamed of.
If UC/UCC is the driver here, then Oracle has to be betting on some major systemic trend that the classic vendors in the UC/UCC space aren’t seeing. One good possibility is that Oracle is seeing a transition from TDM to IP voice on a more aggressive level, an active migration, and that would open a host of UC/UCC-like services for both business and residential users. Another possibility is that Oracle is seeing the NFV trend creating a kind of “open IMS” framework where RAN players won’t be able to dominate IMS deployment like they’ve done so far.
A third possibility is that Oracle is seeing the elimination of the PSTN completely, a transition not to a carrier-hosted VoIP model but to an OTT model. This transition will obviously be resisted by the major carriers and the major network equipment vendors but embraced by the Googles and Microsofts of the world, which would mean that if Oracle wanted to be a player in the future and compete with those two, Oracle might need its own voice strategy. Everything Oracle has purchased would facilitate a deployment of something Skype-like but with a stronger SIP flavor, at least in the sense of being able to interwork with SIP and PSTN calls. That would give Oracle three avenues to pursue; sell to operators, sell to OTTs, or deploy their own service set.
If Google and Apple and perhaps even Microsoft are looking at being MVNOs, as I’ve suggested they might be, then Oracle may have to take action now. Mobility is the major driver of application changes (point-of-activity empowerment as I’ve been calling it) for both enterprise and consumer, which might make it a major driver of software overall. Oracle might even be looking at handset deals in some way, and Oracle buying Blackberry would be a lot more logical than it buying a network equipment vendor for example.
How about “all of the above?” I think there’s clearly a lot of competitive counterpunching in Oracle’s M&A, not the least because Oracle is first and foremost a sales-tactical player and not a strategic player at heart. NFV may not be a specific target for Oracle but it may be a symptom of a functionality shift from network to IT that Oracle either has to play for its own benefit or see as a pathway through which it could bleed market share. They just turned in a frankly bad quarter and their only real strategy (so their earnings call said) was more feet on the street. That’s not going to cut it, even for a sales-tactical player, if the market is really changing at a strategic level.
The next question is “Who next?” both for Oracle and for competitors. There are still some SIP players out there (Sonus, for example) and there are certainly Oracle competitors. IBM has stayed out of this fray, but it’s not too late for it to move. Players like NSN, who have narrowed their product focus to a pure mobile broadband play, may need to think about buttressing their voice and UC/UCC potential. In short, this could be interesting.