Oracle buys Sun, becomes hardware company

The last chapter for Sun Microsystems closes, and the next for Oracle begins as the software company adds hardware to its portfolio.

Stephen Shankland principal writer
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Stephen Shankland
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Oracle announced Wednesday it completed its acquisition of Sun Microsystems in a deal valued at more than $7 billion, a move that transforms the database and business-software giant into a hardware company as well.

Redwood Shores, Calif.-based Oracle has acquired several large companies in its drive to out-consolidate rivals in the business computing technology market, sometimes launching hostile takeovers and sometimes prevailing over regulatory objections. This time, the difficulty was persuading European antitrust regulators who were concerned about the fate under Oracle of the open-source MySQL database software business that was part of Sun.

But that barrier fell as the European Commission approved Oracle's Sun acquisition plan on January 21. Oracle Chief Executive Larry Ellison and other executives from Sun and Oracle are set to detail plans for Sun on Wednesday during a Webcast event starting at 9 a.m. PST.

"My hat is off to one of the greatest capitalists I have ever met, Larry Ellison," Sun Chairman Scott McNealy said in a bittersweet memo Tuesday, bidding adieu to the company he helped found 28 years earlier. "To be honest, this is not a note this founder wants to write. Sun, in my mind, should have been the great and surviving consolidator. But I love the market economy and capitalism more than I love my company."

By giving it a place in the server, storage, and processor domains, the Sun acquisition means Oracle is a direct competitor to more companies, a complication given that it sells its database and other software for use on servers sold by those competitors. IBM already was Oracle's biggest foe, but others that have survived the consolidation wave include Hewlett-Packard, Cisco Systems, and EMC.

Since announcing the Sun acquisition plan in April, Oracle's sales pitch has been one of integrated products--hardware and software built to work together so customers don't have to do the integration work themselves or pay a third party to do it.

On the Oracle-Sun Web site, the company describes its new breadth this way:

With the addition of servers, storage, Sparc processors, the Solaris operating system, Java, and the MySQL database to Oracle's portfolio of database, middleware, and business applications, we plan to engineer and deliver open and integrated systems--from applications to disk--where all the pieces fit and work together out of the box. Each layer of the stack will be architected to improve performance, leverage innovation and centralize management so that IT will be more predictable, more supportable, and more secure. Customers will benefit as their system performance, reliability and security goes up and their system integration and management costs go down.