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SAP bets big on mobile with Sybase acquisition

But apps vendor says it does not believe in trying to buy 'the whole technology stack'

By James Niccolai
May 12, 2010 09:45 PM ET

IDG News Service - With its $5.8 billion purchase of Sybase, announced on Wednesday, SAP is placing a big bet that mobile business applications are the way of the future.

"With Sybase, we see the opportunity to dramatically accelerate our presence in mobility," SAP CTO Vishal Sikka said during a conference call to discuss the deal.

"We can untether and mobilize every single deployment we have of core SAP products, as well as the SAP and Business Objects analytical products."

SAP said earlier on Wednesday that it plans to acquire Sybase, offering $65 per share, a 44% premium over its average stock price over the past three months.

SAP expects to close the deal in July, so long as it passes muster with competition regulators and enough Sybase shareholders support it.

Sybase is still best known in some quarters as a database company, and SAP executives talked a bit Wednesday about Sybase's in-column database technology, called IQ, which helps boost analytics and data warehouse performance.

But Sybase also sells a set of products that are widely used to deploy business applications on smartphones and other mobile devices, and it's those products that SAP seems most interested in.

"Many of our customers, especially the largest ones, are trying to run real-time enterprises, and it's hard to do that when mobile workers don't have the data at their fingertips to make decisions in real time," said Jim Hagemann Snabe, one of SAP's co-CEOs.

SAP will use Sybase's mobile applications platform to let workers access their SAP business and analytics applications from all the major mobile device platforms. "This will literally connect the shop floor to the corner office," said Bill McDermott, SAP's other co-CEO.

The mobile Internet is "10 times larger than the desktop Internet," Sikka said, and SAP sees "upcoming generations of business workers who are completely connected and entirely mobile." The trend is especially apparent in emerging markets, he said, such as China and India.

"We see the world going mobile and becoming pervasively connected," Sikka said. He said the deal supports SAP's three-pronged strategy of offering software on premise, on-demand and now on mobile devices.

SAP has shied from big acquisitions in the past. The Sybase deal will be second in size only to its $6.8 billion acquisition of data analytics vendor Business Objects in 2007. Aside from that it has favored smaller, 'tuck-in" acquisitions to obtain technology it could not develop quickly itself.

This latest deal is about expanding SAP's addressable market and "accelerating growth in both our businesses," McDermott said.

That's a different strategy from SAP's main rival, Oracle, which has used acquisitions to broaden its technology footprint as well as its customer base. Oracle now has a hand in every part of the technology stack, including the database, applications, middleware, servers and storage.

Reprinted with permission from Story copyright 2014 International Data Group. All rights reserved.
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