Feature: Will Sun Rise with Oracle?

Unlike IBM’s failed attempt to acquire Sun Microsystems, the $7.4 billion tendered by Oracle to buy the Santa Clara-based enterprises solutions firm makes good sense for all three companies. It is also gives an honourable exit and hope of a new dawn for a setting Sun, in danger of being gobbled up and swallowed. Oracle, for one, won’t do that. For this company, Sun’s hardware solutions are a missing link in the enterprise solutions story. The competitor buying a brand to kill it may be lurking in there, though.

No comments, for example, came forward on MySQL, Sun’s year-old, billion-dollar buy and an open source database that has been a thorn in Oracle’s side. But as Coca-Cola found with Indian soft drink Thums Up, it’s not easy to kill a popular brand after buying it. Many new websites use MySQL and not Oracle.

My Twitter network tells me that MySQL has been spun off into the open source community under the GPL (general public licence) as Drizzle, so Oracle can’t kill it. Still, I’m concerned about Sun’s open source projects, including the Open Office that I’m writing this article in. Oracle isn’t into open source!

When Sun bought MySQL in January 2008, the billion-dollar deal was dwarfed on the same day by the $8.5 billion Oracle-BEA merger. Oracle wolfs down companies briskly, and digests them well. It’s a good buyer, even if some see more top-notch bean counters, than tech visionaries, in its top management.

Oracle chief executive Larry Ellison called Java the most important software acquisition by Oracle ever, and spent much media space on Solaris. Yes, those are good fits. So why did analysts not predict this merger? I guess we simply didn’t think of it. Once, long ago, I did write something about Sun buying Oracle.

Java is one of the industry’s top brands and technologies. Oracle’s fast-growing Fusion Middleware is built on it. And Solaris is the leading platform for the database, which is Oracle’s biggest business. With Sun in the bag, Oracle can really tune up its database for Solaris, and vice versa.

From Sun, Oracle gains cloud-computing technology. That would pit it well against a SaaS play from SAP or Microsoft - and it doesn’t need to buy Salesforce.com now. But Ellison would really like a Solaris-Oracle 11g cloud, rather than a Linux one. Especially as ‘Unbreakable Linux’ - Oracle’s clone of Red Hat Linux - didn’t ever take off.

Someone on my Twitter network paraphrases for Ellison: ‘MyCoffee is Java, and MySQL is MyToast.’ I hope that stays a joke: That Oracle sees the future in open source, in MySQL, and in an open Java.

As for India, in the Dataquest rankings for 2007-08, Oracle was No. 12 with Rs.5,808 crore from India operations. Sun was at No. 28, at Rs.1,674 crore. These are sales plus revenue attributed by Dataquest to global development and support work in India.

Simply adding the two would have taken the combined entity in 2007-08 to Rs.7,482 crore, or No. 9. Yet, it would have been well behind HP and IBM, as the No. 3 software-hardware-solutions player.

On pure India sales, the two are at par: Oracle was at Rs.1,510 crore, and Sun at Rs.1,456 crore as per Dataquest estimates, adding up to Rs.2,966 crore in combined sales. That’s in the league of SAP at Rs.2,675 crore and Microsoft at Rs.2,937 crore. But hey, those are pure-play software vendors.

Oracle-Sun should compare with HP or IBM - but it would be dwarfed, three or four times over.

Still, Oracle-Sun would make a strong enterprise solutions play. While the merged duo is much smaller than HP and IBM, this deal could worry the latter two, but later. Given the history of mega-mergers, the two tech giants have a year or more to react to Oracle-Sun.

(With supporting research by Rajneesh De at Dataquest. Prasanto K. Roy is president and chief editor at CyberMedia’s ICT Publications. He can be reached at pkr@cybermeda.co.in)