Oracle announced on 27th Jan 2010 that it has 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. The European Commission has officially approved the Oracle-Sun merger after a series of assurances made by Oracle regarding open-source MySQL database. Oracle assured to spend more cash than Sun did on MySQL development and to set up advisory boards to include MySQL customers. Oracle also said it would not require paid support to get a commercial MySQL license and that it would offer flexible support contracts to the customers.

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, Oracle can be truly labelled as a “one-stop-shop” for all IT needs. In a live event on January 27, 2010, Oracle CEO Larry Ellison, along with executives from Oracle and Sun, outlined the strategy for the combined companies, product roadmaps, and customer benefits. Below we highlight the key points of the integration plans.

Oracle plans to invest heavily in developing and selling hardware bundled with applications and database software. Already Oracle’s first such product, the Exadata appliance, has a pipeline of $100 million in sales. Exadata is a high-end storage server based on hardware from Sun released last year. However, the company has killed off Sun Open Cloud platform, a rival to Amazon’s cloud services that was launched less than a year ago. According to Oracle, Sun’s cloud technology will be integrated into its own cloud services, which will target service providers looking to roll out their own public clouds, and enterprises that want to build private clouds. Wherever the two portfolios overlap the general theme is - Oracle’s products remain the flagship offerings whereas Sun’s portfolio will be used as the reference technologies and for lightweight environment/ departmental needs.

Software development tools - Sun’s flagship Java NetBeans will be positioned as a tool for Lightweight Development Environment. However when it comes to develop enterprise-ready applications the developer community has to use JDeveloper, code written for Oracle’s umbrella ADF framework that underlies its database, middleware, and applications offerings.

SOA suite - Oracle’s SOA Suite 11g will remain as the flagship offering whereas Sun’s SOA suite - Composite Application Platform Suite (JCAPS) and GlassFish Enterprise Service Bus products will go on maintenance. Oracle will support collaboration between Sun JCAPS and Oracle SOA Suite through bridge technology while facilitating transition to the converged product line over time.

Identity & Access Management - Oracle Identity management will embed some provisioning technology from the Sun stack, but otherwise Oracle’s suite will remain the core attraction. However Sun’s identity and access management wont be discarded all together, as it will be promoted for midsized web installations. Integrating the two product lines will be a daunting task for Oracle because of all-together different product architectures.

Servers & Storage- Oracle will continue to invest in Sun’s multi-threaded UltraSparc T family of processors, which are used in its Niagara servers, and the M series server family, based on the Sparc64 processors developed by Fujitsu. Oracle will also continue to develop and sell Sun’s x64-based servers, which use processors from Intel and AMD, and also its Netra servers. Moving forward, TekPlus expects more of a custom-built server line from Oracle to run its enterprise applications. Oracle also plans to keep Sun’s disk storage business as well as its tape business. Sun 7000 open storage line and the ZFS storage file system will be at the heart of the company’s storage strategy.

Support Services - Oracle’s network of 8,000 support professionals operating out of 18 support centres will continue providing 24x7 support for customers across Oracle’s product lines. This support will be extended from applications to disk. Sun’s support delivery team will be joining the Oracle team to ensure continuity in how support is provided to Sun customers.

Supply Chain/ Marketing/Channels - Oracle plans to go with the Direct Sales model for the large customers. Oracle’s direct sales force will service 1,700 strategic named accounts and Sun’s top 4,000 customers. Oracle will move from Sun’s “build-to-stock” channel-marketing and supply strategy to one of “build-to-order.” As a result, it will close Sun’s distribution centres in the United States and in EMEA.

Tek-View
All the integration and combined strategy announcements seem to end the speculations of Oracle parting-off any of the Sun’s business units. Oracle is also going to hold worldwide welcome events to learn more about the integration throughout the rest of 2010. The major announcement seems to be the overhaul of the channel model and we believe it’s the right move as Sun had some unique and innovative technologies but it’s execution was not up to the mark. It will be interesting to see what direction Oracle takes in terms of Cloud Computing. Currently it seems that Oracle will follow Cisco’s approach of offering converged infrastructure to enterprise looking to build private clouds. Enterprise clients really need to ask for more clarity here.

The approval of Oracle-Sun merger should be welcome news for enterprise customers. Customers can expect innovative bundles from the combined company. Customers can also get better platform and application integration benefits with a complete stack under one roof. On the other hand, it also brings the disadvantages of vendor lock-in. The system integration and maintenance cost are expected to go down with Oracle-Sun combined offerings. The acquisition has created a big stir in IT market and TekPlus anticipates a price war between the big IT vendors. TekPlus advises end-users to ask for more details regarding product harmonization and bundling strategy before committing to a big project. Oracle needs to move faster in some places to outline more detailed roadmaps for high-end customers looking to invest over a longer time frame. Oracle also needs to better position its services group and create a higher value value stack to take advantage of the integrated solutions. TekPlus believes clients need to wait should clearer answers not be forthcoming but hopefully Oracle will soon articulate a more detailed picture. We will continue to advice in more depth as the announcements are made.

[From our Advisories]