Oracle to buy Acme Packet

Oracle announced on Monday that it has agreed to pay $1.7 billion for Acme Packet, a network equipment vendor that specialises in session delivery.

Carriers and enterprises use Acme’s products to manage the quality of voice, video, application or unified communications sessions across all-IP networks.

Oracle intends to integrate Acme’s offering with its own communications product portfolio, alongside other core network products such as its network application platform and tools to manage service availability.

The move will enable it to help service providers monetise their IP networks, Oracle said. That’s a matter of perpetual concern for network operators, which worry that they will become nothing but a commodity “bit pipe” as application providers reap all the profits.

Oracle faces a saturated market for the product among major telcos, though – 89 of the world’s top 100 communications are already Acme customers, it said.

Still, Oracle could use Acme’s presence in those accounts to upsell customers on its broader array of offerings for communications providers.

A FAQ document about the deal, released on Monday, includes a diagram showing how Acme’s technology will fit within Oracle’s “core network” product portfolio, in between sales, billing and supply chain applications on one side, and end-user applications and devices on the other.

Oracle also plans to bring on Acme Packet’s staff following the transaction’s close, according to the FAQ document. Acme employs “880 domain experts in IP networking,” the FAQ adds.

One observer expressed a mixed view of Oracle’s announcement.

“My best guess is that Oracle will leverage Acme to grow its carrier [operations support systems] business,” Irwin Lazar, Vice President and Service Director, Nemertes Research, said. “Acme has played a leading role in helping carriers move to [IP multimedia subsystem] wireless service delivery, and Oracle sees this as something it can leverage to help carriers provision, bill for, and manage wireless and wireline applications and services.”

However, “what I wonder about is the enterprise side of Acme’s business,” Lazar added. “I don’t see a real good fit between [Acme’s] enterprise session border controller piece and Oracle’s other offerings. It wouldn’t surprise me to see Oracle spin out the enterprise SBC business at some point.”

Session delivery is the fifth of seven layers in the OSI (Open Systems Interconnection) networking model, dealing with the establishment, management and termination of dialogues between computers. It sits on top of the transport (layer 4), network, data link and physical layers. Above it come the presentation and application layers.

Acme’s board of directors has already approved the acquisition, and Oracle expects to close the deal in the first half of the year if stockholders accept it.

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