November 22, 2004 11:48 AM PST

Oracle shoots for the middle

Looking to take on IBM, Microsoft and others, Oracle plans next month to detail further expansion efforts in the infrastructure software market--efforts that include a new content management server and a repackaged application server line.

Even as Oracle battles for control of applications provider PeopleSoft, it has been investing in internally developed products, specifically in middleware--the back-end server software used to build and run business applications. The company's strategy is to build a comprehensive line of infrastructure software in an effort to better compete with specialist providers and industry heavyweights.

Next month, at its Oracle OpenWorld customer conference, Oracle will announce a content management server, company executives told CNET News.com. The initiative, code-named Tsunami, is meant to build on Oracle's existing database business by providing a specialized server for handling the reams of business information that are stored in document form, such as e-mail, spreadsheets and text documents.

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What's new:
Oracle plans next month to detail a push into content management, along with a revamped application server suite.

Bottom line:
The company's strategy is to parlay its strength in databases into the back-end middleware market. But in the content management and application server fields, it's a relative newcomer, and it faces competition from biggies such as Microsoft, as well as niche players.

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Also at the conference, Oracle will discuss a revamped application server software suite, which will include a refreshed integration server, according to the company. Oracle will start selling various editions of its Java-based infrastructure software in an attempt to give customers more flexibility to combine individual software components, executives said.

Oracle's middleware business accounts for a small fraction--less than 5 percent--of the company's overall revenue. But regardless of whether it succeeds in acquiring PeopleSoft, building out a complete "stack" of infrastructure is vital to Oracle's long-term prospects, analysts said. Increasingly, corporate customers are looking to purchase larger "stacks" of middleware products from fewer suppliers.

"Plugging in technology that mortars the cracks in their stack--that's a good use of time and money and at a lot lower risk," said Charles Di Bona, an analyst at Sanford Bernstein.

Di Bona said Oracle's pursuit of PeopleSoft has been a "distraction" from a strategy of expanding its middleware line.

The middleware field encompasses all types of infrastructure software and tools for building business applications, such as portals and databases. These high-end products are typically purchased by central IT organizations and used by the programmers and administrators who build and maintain business systems.

The multibillion-dollar field is dominated by industry heavyweights such as IBM, Oracle, Microsoft and BEA Systems. Each provides a full suite of server software, rather than a single application server product, in an effort to provide corporate customers with a "one-stop shop." Open-source middleware "stacks" are also developing quickly.

Oracle sees server software, notably its application server and collaboration suite, as a natural extension of its database business, where it already has a large customer base.

Oracle "owns the machines that run the database--you dominate there," said Amlan Debnath, Oracle's vice president of server technology. "It's also important to own the footprint on machines that run applications...the so-called middleware layer."

Oracle was relatively late to the game in the application server field, but it's ramping up in that area. Earlier this year, the company said it would double its sales force of people selling its application server to about 420 people.

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