"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 Wednesday that it plans to acquire Sybase, offering $65 per share, a 44 percent 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.
SAP said it won't try to follow the same route. "We fundamentally don't believe in buying the entire stack," Hagemann Snabe said. "We believe in choices for customers and focussing our attention on the right [parts] of the stack."
Sybase will be run as a wholly owned subsidiary within SAP, "allowing the brand to flourish," he said. But SAP won't tie its applications to the Sybase database and push it as a preferred combination for customers. SAP's applications will continue to work equally well with databases from other vendors, Hagemann Snabe said.
That's probably a wise choice. Sybase's database, Adaptive Server Enterprise, is not a popular choice for SAP customers today, and the product had just 3.1 percent of the worldwide database market last year, according to Gartner.
In fact, ASE isn't even certified to run all of SAP's applications. That's likely to change now, and SAP said it plans to enhance ASE with its own in-memory technology, which it developed to boost the performance of its business intelligence applications.
Sybase CEO John Chen will apparently join SAP to run the database division, and SAP plans to give him a seat on its board. Despite its small market share, ASE is popular with financial institutions and stock exchanges, Chen said, and the company has grown its revenue 9 percent on average for the past five years.
Yankee Group sees the deal as a vital one for SAP.
"Sybase brings to the table a mobile platform that can help SAP transform their applications to be consumed anywhere, anytime on any device," the analyst company said. "This is crucial for SAP to stay competitive."
Sybase's stock soared 35 percent Wednesday afternoon on rumors of the deal, and climbed a further 15 percent in after hours trading. Its shares were at trading for $64.50 Wednesday evening, up from a close of $41.57 on Tuesday. SAP's stock was down a fraction, to $44.55.
