Close on the heels of IBM-Sun deal falling apart, Oracle has jumped in and acquired Sun. Oracle was being talked about even as Sun was trying to find suitors but I for one was seeing fewer synergies and more problems of doing such a thing. I thought besides IBM, HP or Apple would be a possible suitor. Apple could have used this get market share on the server side. But then there are so many things Sun had that Apple would not like to have.
Most of the large deals Oracle has done have been those of companies that were doing well once upon a time and now struggling, but had significant overlap on what Oracle was already doing. PeopleSoft, Siebel, BEA all fit that bill. But acquiring Sun came completely from the left field. For the last two hours since I first heard this news I have been thinking about the synergies that this deal might create for Oracle. Here are my Top 10.
- Solaris: Oracle has not had a server offering (that IBM, Microsoft, HP have had) so far. So Solaris gives them that. Oracle has tried and still would be interested in RedHat despite Larry’s insistence that Open Source products have no protection and not viable. Now by acquiring Sun, it has got ownership to one of the better operating systems. In addition to getting a operating system, Sun has excellent presence across multiple industries that Oracle is either a leader or has made it a focus area. Oracle will milk those customers while they also present as opportunities for upsell. Besides this will also prevent Sun from being able to sell MySQL into those customer bases. The only thing that would interesting is to see what would that mean to the major shift Oracle did to support and embrace Linux. Red Hat – breathing a sigh of relief !!
- Java: Java has been a cornerstone of everything Oracle has been developing in the last 10 years, Fusion Middleware, Applications, Tools. While IBM has no doubt done a lot of good things in sheperding Java platform, Oracle has also been putting its money where its mouth is and betting the farm on Java. It has converted all its applications from its own proprietary technology (Oracle Forms) to Java. Now it would be interesting to see how Oracle would share a platform with IBM in taking Java further. By acquiring BEA, it has further reinforced its commitment to Java. The Java community would be keenly awaiting to see how Oracle would take Sun attempts at RIA and Mobile with JavaFX and Java ME forward. So in acquiring the control of Java, Oracle has, if anything, safeguarded its interest/investment.
- MySQL: This is by-far the biggest catch for Oracle in this deal. Oracle has long seen MySQL as a competitor in undercutting some of its deals for lower end or SMB space. First by acquiring InnoDB Oracle got a share of that open source database market. If not for Sun acquiring MySQL, Oracle by now, would have acquired it by itself. Now with MySQL, oracle has the leadership in both commercial and open source database market. Look for Oracle to aggressively market MySQL to undercut Microsoft and stamp out other open source databases from the lower end market.
- Storage: Oracle has not had a storage product before although they did announce a partnership with HP in the last OpenWorld to sell an appliance. With StorageTek line of products coming as part of the acquisition, now Oracle will have a low-to-middle range storage products that it can sell to complete the stack. (I think, one day when Oracle does acquire NetApp, it would complete the storage portfolio)
- Tools: This is the least important and useful part of the acquisition. Frankly this was the main distraction for Sun. NetBeans, Java Desktop are not really viable businesses that someone can make money off of. Look for NetBeans and Java Desktop to die of starvation. If you are one of those unlucky customers who invested in NetBeans, look for JDeveloper being thrust down your throat at a nice price point. My advice, go with Eclipse and save yourself some headache.
- Productivity Tools: Oracle has made multiple attempts are creating productivity tools – InterOffice, Collaboration Suite and made no headway. With Open Office in its grasp, look for some aggressive marketing around it to push it into enterprises. This is one area where Open Source enthusiasts (and more so Open Office lovers) would benefit from Oracle’s marketing might. If Oracle choses to it can really strike some deals with desktop and retailers to push Oracle Office (Knowing Oracle as well as I do, I have taken the liberty to name it myself on Oracle’s behalf). Additionally, this could be a low-end solution to emerging countries and government entities who are always looking to cheaper options. On the other hand, I would not be surprised, if Oracle would turn around and sell this piece to Google, to help it in its battle with Microsoft. A cheque for $500M would not be that much of a deal for Google.
- Middleware. Frankly this is one area where it will create a lot of confusion for customers and more importantly sales staff. Oracle already has a gamut of middleware products (Fusion Middleware, BEA) and now adding Sun to it would be make it interesting. If you look at all the customers Sun has majority of them are outside of N. America. So in a way it will be additive to Oracle.
- Identity Management: This is one of the bigger gains for Oracle in this acquisition. Sun has a stellar list of customers for its Identity management in the Financial Services, Healthcare and Telecom space. This is net new revenue for Oracle. Oracle Identity Management was being sold to existing Oracle customers (mostly government entities). So this is another area where Oracle can go at Microsoft Active Directory customer base.
- Virtualization: Sun and Oracle both announced their virtualization offerings based on Xensource close on the heels of its acquisition by Citrix. While the announcements themselves did more harm to VMWare, there has not been much traction for either products. Going by the customer listings on both their sites, none of the customers are anything to crow about. I doubt if either of them made a dime on this. So atleast going forward, only one of them will be spending money on this effort instead of two. So that is reduction in wastage.
- Utility and High Performance Computing: These are two areas which will gain most traction, thanks to the explosion of information in the last decade and the prospect of that multiplying every year from here on. Sun has been a leader in High Performance computing with a rich customer base. For Oracle, this is a completely new field that it will and can invest those R&D dollars.
I know as days go by more details will become available from Oracle on what its thinking was in doing this deal. Also the reaction from the most impacted – IBM and Microsoft. For now, I think this is one of the smartest acquisitions done by Oracle.
Here is the official press release
For those keeping score here is a list of all the Oracle Acquisitions since the wave started in 2005
- NetApp – for completing the storage portfolio
- Salesforce.com – for CRM
- BMC – for Systems Management