The only thing more surprising than Oracle’s $7.4B bid for Sun would have been a U.S. man or woman winning yesterday’s Boston Marathon.
After participating in calls with Oracle and the press, and reading a plethora of coverage in newspapers and online, I’m left with three questions. All are based on the assumption that the deal will be approved by shareholders and any regulatory bodies that may get sucked into the vortex.
1. How quickly will Oracle exit the hardware business?
My bet: ASAP. I’ll wager that Oracle is already having or has had talks with HP and/or Dell about picking up the pieces. Outside of Larry’s fascination with high-performance database appliances, there’s nothing attractive about a business that has supermarket-like margins. The one reason he wants to keep Sun out of IBM’s hands was to protect the database and middleware revenue streams. Imagine the great sucking sound of Oracle software being ripped and replaced by DB2 and WebSphere.
During the call with Edward Screven, Oracle’s chief architect, I reminded him of Larry’s disdain for expensive hardware. At Oracle AppsWorld in January 2003, the primary message was how Linux performance on Intel boxes was “three times faster and five times cheaper” than other operating systems running on more expensive hardware.
Of course, that begs the question as to why Mark Hurd or Michael Dell would want Sun’s hardware business either.
2. MySQL: Keep or Kill?
My bet: Keep … at least for a while. That puts me in the minority. Based on e-mail and comments in news reports, most people seem to think like my friend Jim. He asked me if I thought one of the reasons for buying Sun was to “ensure that MySQL suffers a quick death?”
In my view, the database is the last layer between complete commodization of the underlying stack (operating system, app server, and related components) and applications. Meanwhile, developers at Compiere, OpenBravo, and SugarCRM are racing to commoditize all the way up to ERP and CRM.
There’s a market for open source databases. Larry wants to ensure that it’s confined to startups, embedded systems, and some internal development. I think he wants to control the growth before it spreads like kudzu.
3. Who does this deal hurt?
My bet: IBM and Red Hat, but not SAP. If Oracle is successful in the acquisition and ongoing assimilation of Sun, this is the equivalent of Larry pulling Sam Palmisano’s hockey jersey over his head and giving him a pretty good beating in front of Scott McNealy and the hometown crowd. On the flip side, the first fight is never the last, and even the most punishing rarely lasts for a minute or two before being broken up by the referees.
For some reason, I think Red Hat is one of the intended victims, too. The company has been on Oracle’s radar ever since Larry trotted out the four live penguins to join him on stage at Oracle OpenWorld in 2006.
Several reporters asked if this deal hurts SAP. I don’t see that, although SAP is running out of large middleware companies to buy to bolster NetWeaver’s deficiencies. We will likely see tighter anti-Oracle alliances being formed. Want to wager that the Oracle news set off the red phones in Armonk, Redmond, and Walldorf? Think there has been any rumbling about anti-trust should Oracle own the #1 commercial database and the #1 open source database?
Bonus Question: Did John Chambers start all of this?
In my view, there were two drivers to Larry’s move to save Sun’s Jonathan Schwartz from becoming the ponytailed Jerry Yang. Clearly, IBM’s decision to walk away was the most immediate catalyst. It gave Oracle a chance to buy a company that it didn’t know it wanted.
The other impetus may have been Cisco’s decision to get into the server business. Suddenly, there were no clear lines of demarcation between networks, servers, and software. Every giant had the right to be in every sector of tech.
With that as a guideline, there is no telling what could come next. Will IBM or Microsoft make a bid for SAP while Cisco mulls buying EMC? The end of the world as we know it?
