The 95% Question

Let's forget about the software from that Oracle-Sun deal for a moment. Yes, Oracle loves Java and Solaris -- Oracle's middleware depends on Java, and lots of Oracle databases run on Solaris. And yes, Oracle will tolerate MySQL. OpenOffice, VirtualBox and other Sun software products? We'll see.

But all told, that's 5% of Sun's sales. What about the hardware?

If you're a Sun customer, that's probably what you're worried about. You've spent plenty on Sparc servers and maybe shelled out something for storage, tape systems and workstations. If it turns out that Oracle wants to remain a high-margin software company and quickly sells off the hardware lines, you'll suddenly have some expensive decisions to make.

Sure, Oracle says it "plans to grow the Sun hardware business... protecting Sun customers' investments and ensuring the long-term viability of Sun's products." That's from Oracle's official FAQ on the buyout.

But it's a little hard to believe. After all, Oracle is a software company that has just dabbled now and then in hardware. And these days, computing hardware is not an attractive business. Low margins. Slow growth. Brutal competition. Hardware is a commodity, and Oracle has worked hard to make it so.

Besides, why would Oracle want to keep -- and invest in -- a money-losing business that puts it in direct competition with HP, one of its most important partners?

I've got no inside information on that one. But I know this: Larry Ellison loves appliances.

Look, here's Ellison on the merger: "Oracle will be the only company that can engineer an integrated system -- applications to disk -- where all the pieces fit and work together so customers do not have to do it themselves."

Most analysts assume that means Oracle will be able to provide all the pieces customers need -- just like IBM. A few think it means Oracle is planning to offer an easy-to-manage midrange system that includes a database and applications, modeled on what used to be called the AS/400 -- again, just like IBM.

But what if it really means that Oracle wants to build an appliance? Not a database or storage appliance, like the machines Oracle and HP announced last fall, but a true application appliance, built from Sparc, Solaris, Oracle and application software, fully integrated, tuned and ready to use.

Say, for example, PeopleSoft-in-a-box.

No assembly required. Minimal customization possible. Self-upgrading, self-managing, stick-it-in-a-closet simple.

Now that's an appliance -- not one for corporate IT shops, but one that would open up an entirely new market for Oracle: smaller customers who would gladly pay extra to avoid having to master the weirdness of enterprise applications.

That would let Oracle grow a hardware business with the margins of a software business.

Better still, it wouldn't cannibalize Oracle's current high-end software customers. It wouldn't compete directly with HP. And it could give Sparc and Solaris the volume to justify Oracle keeping Sun's traditional servers and other data center hardware alive.

Can Oracle do it? Will Oracle do it? I don't know, but Larry Ellison does love appliances. He's been trying for years to make appliances with partners -- but without much success. Now Oracle will own all the pieces, including the hardware. This time, it just might work.

If you're a corporate IT shop with Sun hardware, pray that it does.

Frank Hayes is Computerworld's senior news columnist. Contact him at

Copyright © 2009 IDG Communications, Inc.

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