{"id":2618,"date":"2009-04-20T21:16:27","date_gmt":"2009-04-21T02:16:27","guid":{"rendered":"http:\/\/www.redmonk.com\/cote\/2009\/04\/20\/oraclebuyingsun\/"},"modified":"2009-04-20T21:16:27","modified_gmt":"2009-04-21T02:16:27","slug":"oraclebuyingsun","status":"publish","type":"post","link":"https:\/\/redmonk.com\/cote\/2009\/04\/20\/oraclebuyingsun\/","title":{"rendered":"Oracle Buys Sun Omnibus"},"content":{"rendered":"

\n\"Iron<\/a><\/p>\n

As you must have heard, Oracle is buying Sun<\/a>. A deal this big has a lot going on. Really, the only thing you can do is wait and see what Oracle will do with the massive portfolio they’re buying. If you don’t like waiting, here’s some scenario-speculation, lacing in some fine speculatin’ from others as well – nothing beats the grasshoppers<\/a> (this one included) out of the grass like a mega-acquistion. Some of these ideas and scenarios seem good to me, others seem tragic, but I’ve tried to lay them out with an eye towards reality rather than what I’d like<\/i> to see happen.<\/p>\n

The Viking Scenario<\/h2>\n

\nThe first thing you can expect from a Oracle acquisition is due-diligence of the assets and a comparative analysis where Oracle has competing assets. Oracle will weigh up what’s worth keeping and jettison the rest. The latter will be marked by end-of-lifing via support and maintenance, or releasing code to the community – where it will fade and die. —Gavin Clarke<\/a><\/i>\n<\/p><\/blockquote>\n

First, there’s the easiest scenario. Under this scenario, you can pretty much ignore the more nuanced and tweedy discussion that follows in the rest of this note. The simplest scenario is Oracle strip-mining Sun, selling off chunks that Oracle doesn’t need or understand (hardware), tanking the “unsellable” stuff, and keeping a few, key software assets (Java, Solaris, Identity Management, maybe<\/i> MySQL, and a handful of others).<\/p>\n

A large part of this would be a defensive move to prevent others (read: IBM) from acquiring and benefiting from Sun’s technologies. It’d also be one of the biggest Oracle chest-thumpings ever, like a lawn mower running over a frog.<\/p>\n

The primary break-up here would be Oracle selling off Sun’s hardware business. Becoming a software and<\/i> hardware company is difficult (ask HP and Cisco, or even IBM who makes it look graceful from the outside).<\/p>\n

The point is that Oracle always has been and is a software<\/i> company. Software people think differently than hardware people, and hardware people think differently than software people: one has to always be more important than the other, and it’s rare that one company can treat them as equals. As an example by anecdote, just look at the software that comes with your printers and scanners: no respecting software person would let that crap escape their fingers.<\/p>\n

If Oracle is going to take Sun on as a whole, they’ll have to become one of those few companies that treats hardware and software as equals. The other problem with taking on Sun as a whole, as alluded to in the next first section, is filling out the Oracle consulting and services arm<\/a>. Taking on Sun as a while would be risky if Oracle wasn’t trying to become IBM. To do that, they’ll need armies of consultants, which seems to point towards acquiring a services firm, as IBM did long ago.<\/p>\n

Looking at Oracle past acquisitions, their initial, stated tendency is to speak towards fusing their existing software and newly acquired software together. That scenario isn’t too pragmatic if you can manage to extract good maintenance fees from the existing software (as Oracle seems to be doing with it’s enterprise software portfolio): rather than spend the money to integrate “legacy” software into the future, you just slowly keep ratcheting up the maintenance cost until your customers can’t take it any more, then you sell them a brand new thing that comes with the initial revenue bump of a rip-n-replace install. Hey, those yachts don’t pay for themselves, brother.<\/p>\n

That’s the easiest, “worse case” scenario for the people at Sun: either your product produced revenue in the here and now (you stay), or you’re out. That said, as Gavin gets to in another part of his piece<\/a>, Oracle is known for applying that same rule to itself: if an item from the Sun portfolio is better, they’re prone to throw the weaker Oracle item over-board.<\/p>\n

But that’s the Viking scenario. What’s the more happy-path one(s)?<\/p>\n

One Pair of Hands to Choke Many Throats<\/h2>\n

There’s one grand-theory put forth on the press release<\/a> and the short conference call this morning: Oracle can build a “drive to application,” metal-to-screen stack of enterprise software. Previously, Oracle really only had middleware and enterprise applications to sell. Sun brings hardware, both on the server side and client side (with SunRays). Along with the ERP applications Oracle has, this means a business could buy “everything” from one vendor.<\/p>\n

In reality, enterprise buyers like to buy across multiple vendors and also end up accreting all sorts of technologies and vendors through M&A and different CIOs. Less grandiose than buying “The Oracle Stack” is Oracle’s potential to sell to more parts of the enterprise IT stack, software and<\/i> hardware.<\/p>\n

Becoming IBM<\/h3>\n

I have a blind spot when it comes to the services & consulting arm that Oracle + Sun would have – it doesn’t seem like there really would be a large<\/i> one<\/a>. Enterprises buy 3 things in IT: hardware, software, and consultants. IBM has offerings in all three of these; that’s one of IBM’s strengths. If Oracle + Sun acquires a large consulting arm, you can start to see IBM business model duplication going on, which isn’t a bad business to be in.<\/p>\n

This move would be the final stage of Oracle trying to evolve from it’s database identity. While there are still plenty of sales and places for the Oracle DB, MySQL, Postgres, and now cloud storage\/databases layered with things like Hadoop are showing that, eventually, data management will be commoditized. Or put, another way, the length of time that a company can extract revenue from data management software has shortened. Oracle has long expanded its portfolio beyond the database with acquisitions like PeopleSoft and Siebel, and acquiring the enterprise IT portfolio that Sun has pushes Oracle into being a fuller enterprise vendor, lacking a services arm to collect that extra $8 for every $1 of IT-spend (or whatever kookie multiplier you want to use).<\/p>\n

Dear Customer…<\/h3>\n

This perspective is from the vendor’s angle, of course, which means extracting more<\/i> money from customers. To get a peak at the potential negatives from the buyer perspective, check out Howlett<\/a>:<\/p>\n

\nWho worse to entrust your entire stack than Oracle, that voracious consolidator of application providers and now, it seems, guzzler of open source and hardware?<\/p><\/blockquote>\n

He goes on<\/a> to talk about body parts in vices and maintenance fees.<\/p>\n

Java<\/h2>\n
\n

Surely Oracle will want to derive all the strategic value they can from the acquisition and subsequent control of the JCP. I can\u2019t imagine that they would be willing to give up that control of the JCP in favor of a more open organization.<\/p>\n

That\u2019s a shame as I think all parties would be served in the long run by having a truly open Java run by a truly open organization. I\u2019d love to see Oracle give up the reserved seats and allow the JCP to be truly democratic (or as democratic as any standards organization run by companies with competitive interests can be) but I just don\u2019t see that happening.<\/p>\n

—Alex Miller<\/a><\/i><\/p>\n<\/blockquote>\n

In short, chances are low that the Java world will change<\/i> for two reasons:<\/p>\n