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Understanding Tech Issues with Reliable Vision of Innovation

by Jerry Liao, Philippines

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Analysis--The Oracle/Sun deal

Apr 21, 2009 22:45

In a surprise move, Sun Microsystems has entered into a definitive merger agreement with database and enterprise software Oracle Corporation, valued at approximately US$7.4 billion. After the failed IBM/Sun deal, Oracle wasted no time to snatch Sun from any possible takers. But why?

After IBM walked away from the negotiation table, it's automatic that Sun will grab any offer handed to it. And the US$7.4 billion offer is almost the same offer it got from IBM. So it's no brainer that Sun would say yes right away.

First, let me tell you who I think is the loser in this development--IBM. IBM not only lost the chance to acquire Sun, but due to the failed deal IBM has just created a formidable competitor in Oracle. With its acquisition of Sun, Oracle now becomes a hardware company with Sun servers, a competitor to IBM in the server market.

IBM has also handed to Oracle the tools and technologies to compete with the former in the cloud space. IBM has also lost the opportunity to own MySQL and Java, two main reasons I think Oracle made a good deal with this bargain acquisition.

Sun emerges as the major winner here. I can say it got a good deal in this current economy. It could have gotten a better deal a year or two years ago, but hey, US$7.4 billion is still US$7.4 billion.

Oracle will be every strong in the open source arena with the Sun acquisition, since Sun is working on Netbeans and Glassfish. Oracle will also be strong in the mobile computing space with Java. Oracle will also gain more following due to MySQL, and last but definitely not least, Oracle now owns an operating system in Solaris.

The challenge for Oracle is to make all its acquisition work together. Oracle made a lot of acquisitions over the years. Knowing which technology will complement what technology will be a great challenge. Like how the Sun acquisition would fit in to Oracle's FUSION project.

As far as the consumer is concerned, let us just hope that Oracle bought Sun to enhance both offerings and not to kill a competitor. I am hoping that Oracle will allow Sun to continue with its vision, and to simply remind Sun to include Oracle technology somewhere along the way for possible integration.

With the acquisition, the battlefield is now down to IBM and Oracle. Who will emerge the winner is still a big question mark.

God bless us all!

On a personal note, I thought Cisco or Microsoft would make an offer to acquire Sun.

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drone1212

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drone1212 says...
I think Sun just provided Oracle with the pieces that they were supposed to be working on anyway. While you talked about how this new force can counter IBM, there is another side to this story.

Here is the thing, Oracle has always been perceived as a mid-high end DB and middleware provider. There is always this gap at the low-end market that Oracle cannot close. This is the space that Microsoft, JBOSS, MySQL and some other vendors are playing in.

You see, not only are hardware being commoditized, software are slowly moving that way as well. In this kind of economic climate, it is even more important that Oracle address this.

Before Oracle acquired BEA, BEA has a serious problem with JBOSS/Tomcat. Oracle increasing BEA's product prices by about 25% doesn't help the matter. Now, Glassfish is the only viable open source alternative to JBOSS and Tomcat.

From Glassfish, Oracle can also extract components for their high end offerings in Weblogic, which it is already doing with Metro. This could save Oracle a huge amount of R&D dollars..

In the DB side, MSSQL and MySQL have been a huge headache for Oracle in the Internet companies as well as for SMEs. By owning MySQL, Oracle now have a very strong offering against MSSQL. They should keep it open and cheap and that would create a huge headache for Microsoft.

Together with Sun's other offerings, I think not only IBM should tremble, Microsoft should start to get really worried as well. Finally Oracle can take on Microsoft head-on, pitting Solaris vs Windows, Openoffice vs Microsoft Office, Java vs .Net, MySQL vs MSSQL, Fusion vs Sharepoint.... It will be an interesting fight.

With Sun's open source offerings, at least Oracle can cover a huge gap in their low-end offerings. If not to increase revenue, Oracle can at least keep out the competition and wait for opportunities to upsell.

Apr 22, 2009 14:37

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techguy

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techguy says...
@drone1212: Thank you for your detailed insights. And thank you for reminding me of OpenOffice - Can't believe i miss that? Yes you are very right, with the acquistion, Oracle is now in a better position to compete in both enterprise and consumer market.

Apr 22, 2009 16:21

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ShiningStar

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ShiningStar says...
@techguy: Samething happen to me on Geekonomics. Didn't realise Sun made Open Office.

I think Sun and Oracle made a worthy competitor to IBM. Guess IBM realised their mistakes on not buying Sun. I do think it's odd microsoft and Cisco since they could valuable assets to both companies. I'm guessing both have money issues or don't consider them too worthy.

Apr 22, 2009 19:17

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About Jerry Liao

Jerry Liao is an IT consultant in the Philippines who conducts seminars on various tech topics. He is a regular columnist of Manila Bulletin, a member of the academe, a system developer and a system analyst. He is a frequent fixture in press conferences and tech launchings, most of which are posted at infochat.com.ph. He loves to tinker with the latest gadgets and gizmos, but his most cherish possession are his children.