Every week the Opus team picks a news story or topic or idea that is relevant to the entrepreneurs and businesses we partner with.

RSS Feed

Archives

A billion dollar acquisition for Oracle

Ajit Deshpande - - 0 Comments

Acme Packet, a pioneer in and a leading manufacturer of Session Border Controllers (SBC) for VoIP (as well as for broader Unified Communications applications), was acquired last week by Oracle for approximately $1.7 billion in enterprise value. As of 2011, Acme Packet was the dominant player in the SBC segment, with ~57 % share of the carrier SBC segment and ~34% share of the enterprise SBC segment. 88 of the top 100 service providers count Acme Packet as a supplier at this time. The company had ~$44 million in net income on ~$307 million in revenue over 2011, although over the past year, the company seems to have lost market share to Cisco, especially in the enterprise segment.

As the public domain has noted, this is probably a good acquisition, for multiple reasons: First, this is a fast-growing market – about 96% of all phone lines were still circuit-switched as of 2010 , suggesting that there is immense room for growth in VoIP. By some accounts, the VoIP market is estimated to more than double between 2011 and 2015. Additionally, the continued evolution of LTE and the emergence of WebRTC and Unified Communications provide more momentum towards voice-data-convergence, benefitting SBC vendors significantly. Second, a virtual SBC appliance can be another component of a Sun server bundle for carriers and enterprises, improving Oracle’s hardware margins. And finally, SBCs, as important components in unified communications, will help Oracle fill out its Unified Communications suite.

Going forward, Oracle has a couple of avenues to build on this acquisition: they could further fill out their UC portfolio through other offerings such as telepresence and video conferencing, or they could go after more gateway services such as firewalls, IPS, etc. The former might be a better fit than the latter, but considering Oracle’s recent forays into the datacenter stack, no option can be discounted out. As for startups in this broad sector, this acquisition probably sets up a spending spree from UC competitors such as Cisco, HP and Microsoft across hardware and software, so here’s to many more billion dollar exits in the near future in this sector!

« Back to Blog
Also on the Opus Blog

Map-based intelligence for everyone!

October 31, 2013
Ajit Deshpande - Last week, Google launched Maps Engine Pro, a cloud-based software tool designed to let businesses organize and visualize geo-spatial data. Priced at $5 per month per user (there...

Gamification in the Enterprise

December 11, 2012
Ajit Deshpande - Capgemini Consulting, a global strategy and transformation consulting firm, and Badgeville, a fast growing startup focused on gamification of enterprise applications, last week...

UnderArmour buys MapMyFitness

November 21, 2013
Ajit Deshpande - Last week, athletics apparel giant UnderArmour announced that it was buying fitness tracking mobile startup MapMyFitness for $150 million. Founded in 2007, MapMyFitness had raised...

In-store payments from PayPal and Discover

May 7, 2013
Ajit Deshpande - PayPal, the online payments and money transfer giant, last week announced a new milestone in its partnership with Discover. As of last week, Discover has deals with 50 merchant...