SAP Buys Sybase, Gets Back in the Race

Updated: May 12, 2010

As I said in my earlier post today -- in analyzing product news from HP, IBM and TIBCO -- the receding recession has provided a catalyst for a much larger shift in how IT is done and delivered. These tier-one vendors know something big is up in IT, beyond business as usual, beyond a typical turnaround in the business cycle.

SAP and Sybase are very complementary, from the business, technology and market penetration perspectives. But the price of $65 in cash for each Sybase share by SAP -- a 44 percent premium to Sybase's average price over the past three months -- shows that this is no marriage of convenience.

It's more like a shotgun wedding, and the shotgun is being aimed by a rapidly changing IT environment that favors scale, comprehensive products and services, and global delivery capabilities. A big war chest and a yen for cloud computing don't hurt either.

SAP needed to get back in the Big Game to remain a top-tier IT vendor. Sybase fills major gaps in SAP's portfolio, and gives it an instant chance to play in rapidly changing mobile market.

Sybase has not been ailing, but growing quite well, mostly from its core database and tools businesses. Sybase took a big departure a few years ago with a big swing into mobility infrastructure for enterprises. They have done well, but the stakes in the last year has grown higher as netbooks, smartphones, iPhones and iPads have made mobility the client-side growth markets.

Sybase would not likely grow organically into more aspects of IT, despite it's core strengths and large presence in Asia and on Wall Street. SAP gives to Sybase the larger business applications and sheer global scale to enter the tier-one vendor space faster than it could alone.