Oracle's Itanium Dump Could Spark M&A Frenzy

IBM, meanwhile, might finally take the plunge back into the applications business this year if it thinks there's a real chance Oracle will cut off development of PeopleSoft ERP for AIX or z/OS.

The line between middleware (where IBM is well positioned) and apps is blurring anyway, and with its recent buyouts of BI and analytics specialists like Cognos and Netezza, Big Blue is in some ways already back in the apps business. But it could dive in fully by acquiring SAP.

SAP-on-the-block scenarios are nothing new, but 2011 could be the year it finally happens given the resurgence in M&As and the possibility that Oracle may keep its best software to itself.

The price tag? SAP's trailing 12-month EBITDA stood at about $4 billion as of Dec. 31, and it's expected to post revenue of $13.9 billion in the current year. So Berkery Noyes' numbers indicate SAP wouldn't go for less than $25 billion. Why wouldn't IBM simply continue to partner with the German company and save all that cash?

I previously put that question to IBM software chief Steve Mills in regards to his company's $4.9 billion acquisition in 2008 of Cognos, which had been an IBM partner. Mills told me then that, in his view, partnerships are often too cumbersome for the speed-to-market demands of today's IT industry, and a full-on buyout affords faster integration of existing products and speedier development of new offerings.

The price for SAP could go even higher if a bidding war erupts—a real possibility given that IBM isn't the only potential suitor. HP chief executive Leo Apotheker, who ran SAP solo from early 2009 to early 2010, might also want to add his former employer's ERP apps to HP’s portfolio, given that HP is facing the same threats from Oracle as IBM is.

Of course, more than just a database and some front-end apps are required to build a full enterprise business stack, which means a consolidation frenzy could put providers of lots of the piece parts in play. SAS, CA, BMC, Rackspace, Vertica, Symantec, and others could all get a close look, as might cloud-based app vendors like RightNow and Workday.

Admittedly, there's lots of speculation here, but it's hardly idle. With Ellison taking a harder line with the coopetition, expect reactions from Palo Alto and Armonk.