On February 4, 2013 Oracle announced that it was purchasing Bedford, MA based Acme Packet for $1.7 billion. Acme Packet will be a division within the Oracle Communications Global Business Unit. 80% of this unit’s revenues comes from the carrier business, 20% is in the enterprise space. With Oracle’s gigantic software footprint and the mega trends outlined above, Oracle has an opportunity to propel Acme Packet’s SBC sales into all areas of Oracle’s broad software business.
Initially, there was some surprise about this acquisition: why would Oracle, a software company, buy Acme Packet, a networking company? Constellation believes the acquisition is a highly strategic move on Oracle’s part that deserves some explaining. This point of view is based on my own knowledge of the networking and communications space, and information from fellow analyst Ray Wang, who follows Oracle on the software side. The acquisition is significant for a few reasons:
• Oracle seeks to improve its communications middleware. Acme Packet provides session delivery network solutions. These solutions offer secure delivery of next-generation voice, data, and unified communications services and applications across IP networks. The company has over 1900 customers across service providers and enterprises.
• Point of view (POV): While one doesn’t run across Oracle at all in the enterprise communications market, Oracle does have a strong carrier business built around OSS and BSS systems. In addition, the company has leading CRM, HCM, ERP, PoS, and other enterprise business software solutions. Buying Acme Packet is a foundational part of Oracle’s consumerization of technology strategy. Acme Packet’s session border controller (SBC) products provide security for IP-based communications along with gateway capabilities that enable the different carriers’ implementation of IP- based voice protocols to interoperate with one another.
• Acme Packet enables Oracle To address consumerization of technology for key industries. In many industries such as technology, healthcare, communications, and government, there is a need to prioritize message delivery. For example, delivering a 911 call should have more priority than a download of a movie on a network. In other cases, bring your own technology to work requires new techniques for successfully delivering voice and data.
• POV: On the mobile device front, Voice over LTE (VoLTE) will soon become the standard way voice traffic is carried from mobile handsets. VoLTE is an all IP technology, eliminating reliance on the public switched telephone network (PSTN). Acme Packet’s SBCs are critical for security and routing of this kind of communications traffic. In the broader communications space, reliance on the PSTN decreases almost daily. Wireline telephony companies are continually reporting fewer and fewer subscribers in nearly every country. As enterprise communications and consumer communications transition to all IP technology, SBCs are necessary.
An emerging development in the web browser space is the introduction of WebRTC in which the capability to communicate using voice and video will be native to the browser. This means that there will no longer need to be browser plugins (i.e. Google Hangouts) or third-party software (i.e. Skype) needed for voice and video over IP. One can imagine a world in which a billion browsers are instantly communications-enabled, on all types of devices including PCs, tablets, smartphones, and new form factors yet to be developed. Securing all of these IP communications streams and transcoding between the different communications protocols is where Acme Packet is the market leader.
