Channel reacts to Oracle's $9.3bn takeover of NetSuite

NetSuite customers may be worried by move, channel onlookers claim

NetSuite customers may be worried about Oracle's planned $9.3bn buyout of the firm, according to industry onlookers who have reacted to the deal.

Oracle has recently been looking to boost its cloud offering, after acquiring public cloud outfit Ravello Systems in February this year and pledging to ramp up its EMEA cloud sales staff by adding an extra 1,400 employees.

Stuart Fenton, CEO of software reseller QuantiQ, believes adding NetSuite's product to its offering is a smart move for Oracle.

"I think NetSuite is a very good product in the mid-market cloud space and it has been successful. Oracle has really failed to be successful in that space. From Oracle's perspective it is a really good acquisition," he said.

Alex Hilton, CEO of industry body the Cloud Industry Forum, said: "This will give Oracle more bragging rights, they are very much cloud focused, whether they are doing it through [acquiring] market share or to organically add to the company."

"NetSuite are a dynamic and fast-moving organisation, it is certainly a good move for Oracle, and I really hope it proves to be a good move for NetSuite customers."

Fenton believes the buyout could create problems for NetSuite customers, as he expects the global giant to hike up customer prices following the acquisition.

"This will not be good for NetSuite customers. One of the worst things that Oracle do is just put the prices up. Watch out NetSuite customers, your prices are about to double, triple or quadruple," he said.

However, the CEO was not optimistic about how Oracle would handle NetSuite's product once the acquisition closes.

"I think that it opens up the market for the likes of Microsoft. They will find it very very easy to compete with Oracle."

He said: "This is a good mid-market product but it is going to be destroyed by Oracle. Oracle has hashed up every acquisition they have done that has been a mid-market type company."

Ian Moyse (pictured, below), sales director at Axios Systems, also shares Fenton's sentiment that NetSuite customers have the right to be nervous.

He said: "If I was a NetSuite customer I would be nervous about what Oracle are going to change and what they might break. Oracle need to make sure they don't burn bridges with customers. They have a reputation in the market for being complex to work with and are known to be the hardest one to get licences from."

Hilton, Fenton and Moyse believe the deal could possibly open up market share for other cloud players. Fenton named Microsoft and Sage as companies that could seize the acquisition as an opportunity.

"I think that it opens up the market for the likes of Microsoft. They will find it very very easy to compete with Oracle. Other people like Sage will take some of the space that NetSuite had," he said.

"I think the biggest opportunity is for Microsoft's Dynamics range. It is already a significantly larger and more important product to the market."

Moyse agreed that Microsoft are likely to benefit, but also suggested that Salesforce could also look to capitalise.

The transaction, which was unanimously approved by a committee of Oracle's board, is valued at $109 per share in cash, amounting to a total of $9.3bn (€8.4bn).

"Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever," "We intend to invest heavily in both products-engineering and distribution," Mark Hurd, joint CEO of Oracle, said.

The deal will be accretive immediately to Oracle's non-GAAP earnings in the first full fiscal year after closing, according to Oracle's second CEO, Safra Catz.

Zach Nelson, CEO of NetSuite, said: "NetSuite will benefit from Oracle's global scale and reach to accelerate the availability of our cloud solutions in more industries and more countries."

The deal is expected to close in 2016, subject to regulatory approvals and closing conditions from NetSuite's stock holders.