Oracle-Sun acquisition: marriage destined for divorce
Heart burn awaits shareholders and Larry, and disappointment awaits Sun aficionados.
Feel free to call me paranoid or skeptical. why? I really don’t see the point in Oracle (NASDAQ: ORCL) buying out Sun (NASDAQ: JAVA). It just does not make any straight forward business sense. Of course, as pundits believe, Oracle deliberately jumped into the deal to cut off IBM (NYSE: IBM) from taking over Sun, especially for the big enterprise accounts. Still many Fortune 1000 enterprises use Sun OS and hardware products, which often runs Oracle. If IBM takes over Sun, so goes the big accounts and as well the database market. So from a strategic point of view, while it may appear to make sense, there is more than meets the eye.
I am not going to dwell into why did Oracle buy Sun, rather the ramifications to Sun’s intellectual properties. Let’s get the basics straight: I am a big fan of Sun. Their intellectual capital is tremendous and their hardware is top notch. I’d hate to see those IPs going astray. Now that Oracle owns Sun, while it may help protect their database turf from DB2, there is more headache lies ahead. Why?
- Oracle is not a hardware company. If the super-agile Dell (NASDAQ: DELL) is having issues with the hardware market, what would happen to Oracle? In other words, Oracle has very limited knowledge of running hardware business - It’s a commodity business and a tough one.
- Oracle software executions skills are highly questionable outside the database realm. Every wonder why they have to buy so many companies? For example, Oracle application server (for running Web sites) was a disaster. Answer: buy out WebLogic. The point is: it takes lot more effort, with less reward, to manage operating systems and related tools. In other words, Sun Solaris is headed for the dead pool.
- One of Oracle’s core business is high-margin consulting and trouble shooting services. I have seen cases, where you pay way more than you would for an attorney for their consulting services. Sun does not have any product/service for which business would be willing to fork-over top dollars that easily. In other words, there is no easy money out there with Sun’s products.
What Oracle needs to do:
- Shed the hardware business as soon as possible. Cisco (NASDAQ: CSCO) may be a potential candidate with their new server offerings. Even the printer guys at Palo Alto, for the sake of improved market share, would be interested. I honestly believe, IBM may also be interested in it. But there is too much ego and prestige at stake here between Oracle and IBM, and the deal is unlikely to happen.
- Heavily push the Sun software products into the Open Source realm. With Linux running wild, there is no money with Sun Solaris. Even sun had gloriously failed with their Open Solaris initiative. Sun failed to attract the developer market, which is already cornered by the Mac, Ubuntu and, to some extent RedHat.
- JavaFX: This is a problem child with troubling times ahead. With iPhone, Android, Palm and Blackberry running wild, the potential market share is rapidly diminishing. Plus, it’ll be too expensive to maintain it as a product. Recommendation: Kill it. Or donate to a open source community and watch it die slowly, but at least it wont die on Oracle’s hands. It’s a totally different discussion if Sun had secured, in writing, partnership deals with any wireless carrier.
- ZFS: This is an amazing product and I would hate to see this go bad. Sun was trying to release it kinda-like-an-open-source-model while trying to exercise control over the IP. Every other operating system (OS) desperately needs this technology. Oracle could come out as the good guys by removing the IP restrictions so that other OS could benefit.
- Netbeans, JRuby, and etc.: It takes lot of capital to manage these products, with poor ROI, which won’t bode well with Oracle’s stock holders. Three years from now, I would be surprised to see most of these products in the market. Hopefully, the open source community would step in and help out.
- MySQL: This is the most anticipated product with everyone wondering about its future anxiously. Lots of companies rely on MySQL for their database back-end: from Last.fm to Yahoo (NASDAQ:YHOO). Oracle needs to tread this issue carefully to reap the economic benefits of MySQL, while without alienating the startups.
- Virtualization and cloud computing: Sun has all the ingredients to support next generation cloud computing. Is Oracle interested in it? Why not offer Amazon’s EC2-like hosting services? It’s doable, but requires patience and capital - would the shareholders support it?
Conclusion
Oracle claims that Java was one of the main reason for their acquisition. Amen, someone please better take care of Java. I do, however, believe IBM would have done a better job of taking care of Java. Whether Oracle gets any benefits out of this merger or not, certainly Postgress would as more startups are now seriously considering it as a MySQL alternative. Finally, Sun has (or rather had?) an army of smart engineers. What would happen to them? There is no saying how Oracle would treat them. But I sincerely hope these smart engineers could form a new generation of open community delivering leading edge open source products. Just remember, one guy started the Linux revolution!
Disclaimer
I had hoped that Cisco would buy Sun: may be my point of view is skewed because of that!
Have you given any though to.. what if Oracle successfully manages/integrates this buyout? Oracle seem to have a good track record of integrating purchased entities.
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[...] Oracle-Sun acquisition: marriage destined for divorce [...]
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My whole point is that there is no synergy between Oracle and Sun for the most part of it. So, I haven’t given much thoughts to the possibility of Oracle successfully digesting Sun!! Oracle has to shed most of Sun as soon as possible.
Thanks for the useful info. It’s so interesting
Unfortunately this looks like a very biased and like a very, very poorly thought out plan. Oracle can certainly gain alot of traction with Sun’s product set.
- NetBeans. Let’s start with NetBeans. Oracle possesses a Swing-based JDeveloper with a small community. Merging JDeveloper technologies as plugins into NetBeans provides them with a much, much larger community that addresses the hottest segments in the web 2.0 industry and the most lucrative aspects of Java, enterprise Java.
- OpenSolaris provides a much more sophisticated product set than Linux. Let’s start with an advanced file system called ZFS that is the envy of Linux developers everywhere. It get’s a lot better than that - OpenSolaris offers four sophisticated virtualization technologies - Solaris Zones (a lightweight virtualization container which is an excellent light-weight container that host Oracle databases), Logical Domains and Xen-based xVM Server (hypervisor-based virtualization) and finally Crossbow a way of virtualizing the network. There a number of other unique technologies that OpenSolaris offers including not the least that it offer superior security over Linux. This is a no-brainer technology for Oracle to take advantage of. Note that Oracle is probably interested in creating business solutions around appliances which OpenSolaris already offers in the “Amber” road products. These solutions offer unprecedented features not found in competing storage products - being able to easily view exactly what is happening on the system (using DTrace - another killer OpenSolaris technology).
- JavaFX. If you were at JavaOne (last week) you would have a remarkably different opinion. The fact that you only can compare JavaFX to Android, Blackberry and Palm highlights that you don’t know what you are even talking about. JavaFX is a multi-screen language that can be used not only cell phones but also on interactive TV applications, desktop applications and rich internet applications. Please understand the technology before you recommend killing it. JavaFX has already spun up a community around it.
- Sun Cloud. Why not EC2 ? Because Sun Cloud is a killer offering. They have a super easy way to *visually* configure cloud computing assets. Also why would Oracle put their offering in another company’s hands ? You have to think in terms of long-term strategy instead of expedient, short-sighted behavior.
Totally agreed. what a disaster to open-source communities.
Charles Ditzel .. I agree especially with your view of JavaFX .. I myself am a JavaFx developer and my tool is suprisingly a security based app. .. There is lot more power in JavaFx than most people seem to understand.. It has seamless integration to most java components and works wonders with Jython, JRuby etc., using all these amazing optimizations are possible
Completely agree with you, its gonna be a disaster to the whole Java/JEE technologies, especially when you look at previous Oracle’s Java products like JDeveloper, Oracle Application Server, OC4j and so on, they all have been doomed. R.I.P. Sun.
Completely agree with you, its gonna be a disaster to the whole Java/JEE technologies, especially when you look at previous Oracle’s Java products like JDeveloper, Oracle Application Server, OC4j and so on, they all have been doomed. R.I.P. Sun.
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