I’m shocked. Oracle this morning announced plans to acquire Sun Microsystems for $7.4 billion. The deal reorganizes the software landscape for managed service providers and VARs. And it also raises questions about what Oracle will do with all of that Sun hardware.
From where I sit, this deal is about value (Oracle acquiring Sun at a low multiple) and software synergies. The Sun Solaris/Oracle combo has been favored by thousands of businesses for more than decade.
Of course, Solaris is a legacy name that’s being eclipsed by Linux and Windows Server in many markets. But Sun’s other software offerings — Java, MySQL and lots of middleware — fit nicely into the Oracle portfolio.
In some ways, the open source MySQL database was disrupting — but not destroying — Oracle’s traditional database business. By acquiring Sun, Oracle has a much higher chance of dominating the present and future database markets — whether customers want open source or closed source options.
There are also cloud computing and SaaS (software as a service) considerations. Cloud services (such as Amazon Web Services), co-location centers and Web hosting firms increasingly offer MySQL as a SaaS option in their environments.
Oracle: The New Hardware Giant
Still, I’ve got to wonder: What is Oracle going to do with all of that Sun hardware? Does Oracle really want to compete against IBM, Dell, Hewlett-Packard and Cisco Systems in the server and storage hardware businesses? That’s the wild card.
Apparently, yes. In the official press release, Oracle and Sun wax poetic about Sun’s SPARC and x64 systems. Personally, I wonder how successful Oracle will be in the hardware business. But I think Cisco’s moves into servers made Larry Ellison start to wonder “why not us, too?”
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Smart move by oracle considering the low price. I would expect Oracle to at least consider selling off the hardware side of the house to the highest bidder (IBM, HP).
Update: Here’s a letter from Oracle President Charles Phillips to customers and channel partners, explaining Oracle’s acquisition of Sun.
Update 2: Here’s an FAQ from Oracle about the deal. Please note that the FAQ document is a PDF download.
Hi Frankie Says: I completely agree that hardware is going to be an awkward business for Oracle. But I wonder if Oracle would really ever want to exit the hardware business. Decoupling all of those hardware employees, existing business contracts, real estate, etc. from Oracle-Sun could turn into logistical and management nightmares.
It was unimagenable. And spot on, Oracle can claim more database user base, open or closed. Buy why would Oracle want to sell off the hardware part. I think they might have a bundled product (Fastest machine + Oracle + Middleware + ERP) for enterprises at some point in the future, even if its just for the media hype.
Edward: You may have a point. Plus, check out this blog from ZDNet’s Dana Gardner, who predicts Oracle-Sun will partner up with HP to gang up against IBM. Interesting spin, and Gardner makes a lot of sense.
I notice the FAQ conspicuously leaves out the question of Solaris licensing and the OpenSolaris product. Will Solaris be forked to a proprietary license in the future? Will OpenSolaris exist? I guess the answer is so ugly they don’t want to talk about it yet.
In Oracle’s defense, this deal was hammered out over the weekend. It’s far too early to say definitely how OpenSolaris will be impacted. But opensolarisnoob, you’ve raised an interesting point about the FAQ.
They seem to have had their plans for MySQL (potentially a difficult issue) at the ready. I’m guessing their plans for Solaris are ready as well, and not something I or others without an enterprise budget will want to hear..
Opensolarisnoob: I was surprised to see how little MySQL was mentioned in the press release. It’s as if Oracle doesn’t want to raise regulatory concerns about having the top closed source and open source databases under one roof… …
Microsoft may have taken a hit today with SQL Server, me thinks… Oracle attacking from above. MySQL attacking from below…
I think everybody should calm down a bit. This deal could be shot down in a second if it’s deemed to threaten competition. In terms of importance, what Oracle plans to do with MySQL is far more important than what it does with openSolaris.
Aikiwolfie: Agreed — the future of MySQL is far, far more interesting than OpenSolaris.
Great perspective from JasperSoft CEO Brian Gentile in his blog, stating that Oracle-Sun deal is a battle for software developers. Gentile believes the hardware piece will be spun off over time. Interesting.
hmm, it seems to me that Red Hat would suffer with this acquisition…
Andres: Yes, Red Hat-Oracle and Red Hat-MySQL are popular combinations. But I think customers will continue to vote for Intel hardware running Red Hat at the foundation. The question is whether Red Hat can maintain middleware momentum (JBoss) vs. Oracle BEA and Sun. I say yes, Red Hat will maintain momentum. Oracle is going to have a difficult time/distraction with Sun’s hardware… …
With regards to MSSQL being under attack, it’s my experience in the danish market that it is MSSQL which is still growing in the corporate sphere. MySQL is being used by those applications built for it, but others code against Oracle or MSSQL. And Oracle just doesn’t seem to add the value for money these day (here I take a TCO perspective).
I would hope for Oracle to create an enterprise database (oracle) which was easier to administrate, and perhaps add some features to the “free” MySQL – especially a PL/SQL for MySQL.
Am I the only one who would believe that a transparent language syntax between mysql and oracle would be insanely cool?