With merger, Oracle reassures Sun customers

Oracle will invest in UltraSparc, Solaris and revamp sales

The thing that Oracle Corp. wanted to make clear Wednesday, its first full day as the owner of Sun Microsystems, is that it's time to stop worrying about the future of Sun.

There was probably no other message that mattered more for Oracle about Sun, which has lingered in never-never land since the acquisition was announced last April. But big changes are ahead.

Sun's old way of relying on partners and resellers to sell to its largest customers will change to direct support model and, more broadly, a build-to-order setup backed by a new army of sales representatives that Oracle is hiring.

There will still be broad support for many of Sun's core technologies, such as UltraSparc, Solaris and Java, and its middleware applications -- a point that Oracle officials worked to make clear. But Sun's product catalog will be substantially scaled back, and much still needs be revealed about Oracle's plans in that area.

What will emerge from the combined company will be highly integrated systems built with Sun and Oracle technologies. The Oracle Exadata high-end database and storage system developed jointly by these two companies is a preview of what's ahead. In the new delivery system, built-in support technology will get a lot attention; there are plans for the use of tools called "collectors" that will provide feedback on system configuration and help manage changes.

Oracle says it will boost its research and development spending from $2.8 billion to $4.3 billion.

One longtime Sun customer, Daniel Grim, chief technology officer at the University of Delaware, said one message he heard is that Oracle wants a more intimate relationship with customers. "If they do that, it will be good," he said.

But Grim also wants to see some product commitments, including stronger support for Solaris on x86, which he said right now is all but unsupported.

"It gives me hope, but I'm not sure that I've heard enough yet that I'm reassured," said Grim of the merged company's plans.

In a nutshell, customer confidence was Sun's problem going into today. In one year, Sun's market share in worldwide server factory revenue went from 9.5% to 7.5%, according to IDC's third-quarter report, the research firm's most recent report. But now Sun's server product line has the backing of Oracle sales and support operations, and Oracle CEO Larry Ellison is promising a fast comeback for Sun.

Some of what Oracle said Wednesday about its plans was a little over the top. Discussing the centralization of support, Oracle President Charles Phillips said, "We want the best-paid reps in the industry. We want the Derek Jeter" -- a reference to the New York Yankees' star shortstop.

"To the administration that wants a jobs program, this is a company that is creating jobs -- 2,000 jobs today," said Phillips, who did not mention the layoffs that have already taken place at Sun or other workforce reductions that may occur as the merger is implemented. Oracle has not said how many be jobs could be lost.

Analysts will be watching carefully to see how Oracle, fundamentally a software company, manages a hardware vendor.

"A software company running a hardware company has, to my knowledge, never been done successfully, said Rob Enderle, an independent IT analyst. "If anyone can do it, Oracle would be on my shortlist, but on a scale of 1 to 10, with 10 being most difficult, this is definitely an 11."

Oracle, it seems, is putting a lot of emphasis on developing Sun's core technologies, improving its UltraSparc chips, increasing their thread count and memory, and keeping Solaris as its enterprise operating system of choice.

Sun's Solaris strategy and its open-sourcing of that operating system have helped to, perhaps, give its users confidence about the future. Hewlett-Packard Co. has become a major seller of Solaris x86 systems, but it does not sell Solaris on its Itanium systems, which support HP's own Unix offering, HP-UX. IBM has Power and AIX, but the Unix market for all these vendors -- while still large -- has been declining as the capabilities of x86 system chips have increased.

But the immediate step for Oracle, said Charles King, an analyst at Pund-IT, is for Oracle "to keep the vast majority of Sun customers on board and basically let them know they haven't been forgotten."

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, send e-mail to pthibodeau@computerworld.com or subscribe to Patrick's RSS feed .

Copyright © 2010 IDG Communications, Inc.

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