SAP attempts to challenge Oracle with Sybase acquisition

German database manufacturer SAP acquired Sybase this week in a $5.8 billion deal. The deal was reportedly mutually desirable, with SAP keen on expanding its mobile offerings through Sybase’s mobile technology.

The massive worldwide interest in smartphones makes this the prime time for Sybase to capitalise on the deal with SAP and extend its range and influence in handheld computing devices. Additionally, many commentators are claiming that this deal is an outright challenge to the supremacy of Oracle in the global software market. Let’s take a look at those two statements to see how true they are.

Twelve years ago, a move like this would not even be news. Oracle CEO Larry Ellison said in 1998 that SAP was not a company that posed much of a threat to Oracle’s dominance of the market. Had the smartphone not come along and taken the world by storm, with 51,234,000 iPhones alone sold worldwide since 2007, SAP would have no niche through which to step on Oracle’s toes (or claim to). Sybase has established itself as something of a leader in mobile technology; its database solutions support SMS messaging chores for billion mobile phones. Equally, mobile technology, we are constantly told by security providers and analysts, will present the greatest challenge to businesses and software providers as increasingly organsations rely on mobile devices. It would seem, from this, the SAP has made a good move, but there’s more to it than that.

Sybase is currently selling at $65 per share, which is a 44% premium over the company’s average stock price in the last quarter; clearly, this was a costly move for SAP. Sybase only accounts for around 5% of the total market, throwing doubt over whether the $6 billion takeover will translate into real gain.

So does this deal mean that SAP is throwing down the gauntlet at Oracle’s feet? Commentators have noted that this deal strikes just as the software giant processes its acquisition of Sun Microsystems five months ago, but if this is a challenge, it is one that Oracle is likely to take lightly. Whilst Sybase may have the upper hand in some areas of mobile technology software, it is still in no fit state to challenge Oracle on application suites.