Oracle (NASDAQ:ORCL) derives around 25% of its stock value from middleware software products according to our estimates. Thanks to acquisitions like BEA in 2008 and Sun Microsystems in 2010, Oracle has been able to double its market share in the past four years against competitors like IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT) in the middleware market.

Oracle sells its suite of middleware products under the brand “Oracle Fusion Middleware,” which acts as an interface between front-end applications like web-based applications and back-end applications like the database. Some of its popular middleware tools are Oracle Weblogic Server, Oracle Tuxedo, and Java Software (acquired through the Sun acquisition).

With proven performance of its middleware products and growth in global middleware market, we believe Oracle’s market share will rise to around 20% by the end of our forecast period. Trefis members however predict market share will be slightly higher in the coming years as indicated in the chart below.

We currently have a Trefis price estimate of $37.94 for Oracle’s stock, about 14% above the current market price of $33.29.

Oracle’s Middleware Solution Beats IBM WebSphere

The Oracle middleware solution is completely integrated into a suite and based on open industry standards like Extensible Markup Language (XML) and Java Message Service (JMS). It is used in development, deployment, and management of service-oriented architecture (SOA), a suite of interoperable services that can be used within multiple, separate systems from several business domains.^[1] Oracle recently unveiled Enterprise Gateway 11g, which enhances security and control of SOA and cloud environments.^[2]

In a recent test, Oracle’s Weblogic Server running on Dell with 4 Intel-Xeon processor system beat IBM WebSphere running on a similar configuration by more than 60%.^[3]

Continuous Growth in Data Requirements to Drive Middleware Market

As the Internet user population increases, the demand for data maintenance will also increase. Faster adoption of Internet video usage will also drive growth in data requirements. Since middleware software products are tightly integrated with database and application software products, we expect that Oracle’s increasing presence in the database and applications market could lead to a corresponding increase in its middleware software market share.

Our complete analysis for Oracle’s stock is here.

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