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Can Oracle make sense of Sun's hardware?

Planned $7.4B acquisition of Sun would thrust software vendor into the server business

By Tom Sullivan
April 20, 2009 12:00 PM ET

InfoWorld - When Oracle Corp. agreed to buy Sun Microsystems Inc. today, it took a leap into the hardware realm. And so the obvious question is: Can the software-centric database and applications vendor succeed with Sun's hardware business?

"I'll hand it to Larry Ellison: That man can shop," said Laura DiDio, an analyst at Information Technology Intelligence Corp., a research and consulting firm in Boston. "This deal is very, very complementary for Oracle. It gives them instant credibility with hardware, virtualization, open source, storage and cloud computing."

(Editor's note: InfoWorld's Neil McAllister predicted this acquisition last week in a blog post headlined "What if Oracle bought Sun Microsystems?" Also, see this story from late March: "Reporter's notebook: Sundown for Sun?")

Industry acquisitions in the tech realm and elsewhere, however, are filled with stories that begin with promising credibility and end in anything but. Compaq Computer Corp.'s purchase of the former minicomputer giant Digital Equipment Corp. tops that list. And for Oracle, adding Sun's technologies to its collection means stepping into fields where it hasn't been before, namely hardware.

Even though Sun's hardware sales have flagged ever since the dot-com bubble burst earlier this decade, the company's servers still have a massive installed base, said Chris Ingle, consulting director for market research firm IDC's European systems group. That will give Oracle a good opportunity to convince those customers to upgrade to new systems in the coming years. "There's a lot of money there," Ingle said. "There's a lot of loyalty there."

There's also a history of Sun's Solaris operating system and Sparc servers being the leading platform for Oracle's database. And tightening that relationship is appealing, "especially after the next generation of hardware comes out," said Andre Preoteasa, director of IT at alcoholic beverage company Castle Brands Inc. "I would think the hardware would be optimized for Oracle databases, or at the least [there would be] the possibility of Oracle troubleshooting the hardware in addition to the software."

But Oracle's vision of a seamless flow from the hardware to an operating system to applications may be harder to realize because businesses often use heavily customized applications, and it's rare that a few appliances and accompanying software are ready to go to work out of the box, Ingle said. That integration is also where vendors make most of their money, he noted.

Whether Oracle can succeed in the hardware fray depends on how it proceeds with Sun, DiDio said. "Sun may have had marketing problems over the last several years, but they have excellent technology and superior support," she added. "If Oracle leaves the technology alone — like Hewlett-Packard did with Compaq — [and] if they let Sun be Sun, they should be able to thrive. What you wouldn't want to see Oracle do is scatter its energies."

Reprinted with permission from InfoWorld. Story copyright 2012 InfoWorld Media Group, Inc. All rights reserved.
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