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This week SAP announced intentions to acquire Sybase in a deal that would be worth around $5.8B. Sybase, once a contender in the database wars of the 1990's, did about $1.2B last year, with over half of that revenue in the RDBMS market, placing them forth in database revenue share. That's not really that telling though, the RDBMS market is really consolidated in 3 vendors, Oracle, IBM and Microsoft, who together make up over 85% of total sales. The rest of the market is divided among 25+ vendors with Sybase holding about 3.2% of the total market share. Today SAP customers run on the big 3, with Oracle holding the largest share in the customer base by a good margin. In fact SAP is rumored to be the largest reseller of Oracle databases. Sybase has 0 share, SAP does not run on Sybase (there's a whole story behind that statement, which in fact contributed greatly to Oracle's win in the database wars but I'll leave that for another time).
So why then, would SAP be interested in Sybase? In a recent briefing with the new SAP co-CEO's they shared their new strategy for the company. As a part of that strategy (explained in more detail here), three pillars were laid out: On demand, mobile and orchestration. It's the second pillar, mobile that seems to be the big driver behind the acquisition. By using the Sybase 365 mobile platform SAP should be able to bring it's enterprise apps to the mobile market much faster and possibly capitalize on the trend that is clearly accelerating around enterprise mobile. Sybase has some interesting components like mobile payments, alerts, m-commerce, etc. that could help SAP in verticals like retail and banking, and especially offer the potential of opening up more growth opportunities in emerging economies that tend to be much more mobile centric. The SAP "on device" strategy combined with Sybase's mobile platform could make SAP a player in enterprise mobile.
One other synergy with Sybase, at least according to SAP, is the combination of Sybase's technology (column stores) with SAP's in-memory processing technology in applications that require analytics in high volume environments (like financial services). There's been a lot of visibility around in-menory from the SAP execs, but there seems to be quite a bit of skepticism as to the real business opportunity that the new technology might open up for SAP. I guess this falls into the "it remains to be seen" category.
SAP's first strategic pillar, on demand or cloud computing, is critical for their business. Sybase does have capabilities in both public and private cloud as well as relationships with Amazon EC2 that are of interest from SAP. Private clouds could be particularly important to SAP's install base, who are today overwhelmingly on premise. In addition, SAP's european customers, due to EU and country level privacy laws, may be very interested in private cloud deployments.
