After announcing earlier Wednesday that it closed its $7 billion acquisition of Sun Microsystems, Oracle followed up with a previously scheduled Webcast during which executives laid out the rationale for the acquisition and detailed plans for much of Sun's product portfolio.
When the acquisition was first announced, it seemed an odd match to many. Oracle was a software company, and Sun was widely thought of as a hardware company--though it was really more than that. But there was always another aspect to this, if you thought more broadly about where the computer industry was headed.
The big boys were all aligning through either acquisition or partnership into the sort of vertically integrated computer companies that were once familiar but were largely displaced by processor, operating system, server, storage, and networking specialists.
At the time of Oracle's announcement that it was acquiring Sun, we had already seen moves like Hewlett-Packard's purchase of EDS and the ramp-up of its ProCurve networking business. The subsequent months have only highlighted this trend, with the increasingly close partnership between Cisco Systems, EMC, and EMC's VMware subsidiary. And HP's acquisition of 3Com and. IBM never abandoned a considerable vertical bent.
With Sun and Oracle's, there could no longer be any doubt that delivering factory-integrated stacks from server to storage to software was a big part of this acquisition. The only surprise today was the strength of the all-Oracle stack message.
Oracle CEO Larry Ellison, among others, made it clear that the IBM of the 1960s was the company's integration model. There were a few references to selling "best-of-breed components" to customers who wanted to purchase that way. But promoting the benefits of buying a complete hardware and software stack designed to work together was one of the other overriding themes of the day. I'm not sure that I heard "heterogeneous"--one of the terms that computer companies like to use, even when they don't really mean it--uttered once during the five-hour broadcast.
The other big theme could be summed up as something along the lines of: Sun had great innovation but executed really poorly. For example, Oracle President Charles Phillips said "Sun had created a very complex supply chain" and that Oracle was going to "implement a more attractive systems support plan. Some [support was] done by Sun, some by others, some by no one." Ellison was, if anything, more blunt: "We just need to do a better job of taking engineering output and delivering to customers."
There was much throughout the day on that theme, and it's hard to argue with the basic contention.
Oracle also plans to move Sun customers toward a more direct-sales model, with more specialist sales representatives who are compensated on the basis of margin rather than revenue. Partners continue to play a role, even an important one, in Oracle's model. However, it is a role that must provide specialized and specific value to the customer or the Oracle sales force.
"Value" was mentioned many, many times throughout the day in the context of partners. The clear message was that if you're just a distributor, you have little place with Oracle. Left unmentioned was that a big rationale for more integrated systems is to eliminate the need for system integrators, so it's likely that even many value-add partners will feel the pinch.
Oracle's high-level message here was that it plans to "grow Sun to profitability." There was much talk of hiring in key areas during the day, with the number 2,000 mentioned. Ellison said that figure "is about twice the number of people we're laying off."
Given that MySQL was the root cause of the European Union's long delay of this acquisition closing, you might have expected to hear a lot about it. You didn't really.
Edward Screven, the chief corporate architect, mostly said some of the things you'd expect: Oracle will make MySQL better. It fits well with existing Oracle deployments. Oracle will make MySQL support better. And so forth.
Oracle said MySQL will become part of the company's open-source business unit, retaining an independent sales force and development organization. This does suggest at least a mildly hands-off approach, relative to most of Sun's software assets. However, neither Screven nor anyone else said anything specific about governance models or philosophies about contributions under the GPL license versus proprietary extensions to the commercially licensed code. Thus questions remain in this area as they do for Open Office, which was also only briefly mentioned.
Sun and Oracle have lots of software, so I'll just hit a couple of other high spots here.
Thomas Kurian, senior vice president of Oracle server technologies development, spent quite a bit of time on Java road maps, calling Java "one of the crown jewels coming to Sun." Ellison summed up Oracle's interest here: "There's a lot of money to be made in the Java middleware space. Our next-generation Fusion applications are based entirely on Java. What you charge and what you give away isn't as important. We already know how to make money from Java."
Where Sun has overlapping products with Oracle, such as in application server middleware, Oracle generally positioned the Sun products as more suitable for lightweight development, best for specific targeted uses, or as sources for technology. For the most part, existing Oracle products will continue to be those sold for enterprise development.
One technology area where many of us have had trouble imagining Oracle making large investments is chipmaking. Sun chips have lagged in recent years and, even with major new talent and cash infusions, development cycles are relatively long.
Nonetheless, Oracle presented a road map going out four processor refreshes in the UltraSparc Tx (originally code-named "Niagara"), and Ellison suggested that Oracle could do "clever things in the chip, like encryption and compression" and "a lot of things we used to do in software can find their way into the silicon." It's worth noting that IBM does this sort of thing in its Power Systems and mainframes today, and that Sun has already been heading down this path with UltraSparc.
I still consider it an open question whether this enthusiasm for developing processors extends beyond a near-term to midterm desire to keep the Sun installed base happy and thereby buying stuff from Oracle. But at least for now, UltraSparc has a future.
And the same might be said of many other Sun products. Some, such as Java, are clearly an essential component of much of what Oracle does. And however much some didn't believe Oracle would get in the hardware business, the drive to integration is evident at not only Oracle but across much of the computing landscape. But for much of the rest, time will tell. Even if little is axed outright, some will wither over time, if they don't ultimately grow in their new environment.