Oracle announced plans Tuesday to buy Agile Software in a $495 million cash deal, giving the software giant a foothold in the product lifecycle management business.
Oracle plans to use Agile as the foundation for its product lifecycle management business. Agile, based in San Jose, Calif., develops software designed to manage a product's lifecycle from concept and design to production, sales and service.
"Oracle has virtually zero in the PLM business, and this deal will help them figure things out, like collaboration applications for engineering or marketing," said Bruce Richardson, an analyst with AMR Research.
Oracle plans to fold Agile into its overall applications business, but create a team of Agile developers within Oracle's overall development team. The same approach will be taken for Agile's salesforce, said Jon Chorley, Oracle's vice president of applications product strategy.
The PLM market is expected to grow to $6 billion this year, up from $5.2 billion last year, according to AMR. Overall, the PLM market is expected to grow at an annual rate of 9 percent until 2010. While the market is growing at a nice clip, it is still a fraction of the overall enterprise applications market, which stood at $56.4 billion last year.
Agile's products are designed to help customers share product specifications, configurations and collaborate across the supply chain in a variety of industries.
"Agile gives Oracle a horizontal application that serves a lot of big customers like Cisco in a number of industries," Richardson noted. "It gives Oracle more exposure in the medical business and Agile is also making inroads in the food and beverage industry."
In addition, Agile frequently appears in customer accounts shared by SAP AG, Oracle's archrival. Siemens, for example, uses both SAP and Agile, with Agile covering a wider base of Siemens business, Richardson said.
"SAP looked at acquiring Agile and other third parties in this space, but a couple of months ago it decided to build its own (PLM)," he said.
Agile, which has roughly 1,300 PLM customers, has several customer accounts it shares with SAP. Oracle plans to continue supporting those SAP customers who use Agile, Chorley said.
The deal is expected to close in July.