Gartner on Oracle Acquisition of Sun

June 25th, 2009 by Julia Lim

Oracle Acquisition of Sun Microsystems: Advice from the Gartner Analysts

A nice bonus session at the Gartner IOM Summit. The packed audience just goes to show you how much interest and how much remains unresolved in what the Oracle Acquisition of Sun (and MySQL) really means for enterprises.

Software in 3 parts: (Donna Scott)
1) Java: < 1% of Sun’s revenue but huge opp for Oracle (mobile devices and applications). Oracle’s challenge is to make sure the Java community continues/develops and remains open in order to make this successful.

2) Application integration middleware: about 10% of Sun’s revenues. Serious overlap with Oracle’s capabilities (BEA). Oracle middleware will be the survivor. Oracle will support Sun’s middleware but eventually going away so plan for it.

3) MySQL: > 3% of Sun’s revenues. Huge opportunity for Oracle to get additional revenue from subscription license base. Oracle  needs to position clearly when customers should buy MySQL vs when to buy Oracle database offerings. But good news: Gartner is expecting Oracle to support and move forward with MySQL (except for overlaps like the Falcon project). The key is cleaning up the positioning and target market opportunities.

Servers: (Carl Claunch)
We are seeing the tearing down of the “gentleman’s agreement” for companies focusing on their portion of hardware/software stacks. (Look at Cisco and HP). So increasing competition across the stack, and Oracle has a more vigorous vertical stack to compete with now.

Culture – Oracle is an ”adult supervision” type of business, and they are going to make some hard-headed business decisions about what survives/thrives and what goes away.

Sun had multiple competing hardware lines. Sustaining this wide overlap contributed to financial pressures on Sun. Gartner does not expect Oracle will walk away from any of the product lines immediately- will support customers for a time at least.

Oracle’s need to shift to x86 and Linux creates a high interest in this Sun product line for Oracle going forward.

In the area of virtualization, there is a lot of overlap thanks for acquisitions on both sides. Expect an announcement about how this product line gets rationalized very soon after the deal closes; they are very aware that every minute they don’t talk to people about this, they’re losing money/customers.

Storage (Stan Zaffos)
Recently gotten a lot of inquiries by customers:

Will Oracle stay in the hardware business? Or was this acquisition just a sw acquisition play?

If you believe what Larry Ellison says, then yes, hardware business will move forward.

• Commitment to hardware
• Limited liabilities, probably continued investment
• But on the Tape side - some caution is advised

Questions from the audience:

Virtualization – Oracle/Sun has multiple technologies/tools but all based on Xen. What will happen here?
Expect rationalization of what are the compelling features and picking a favorite solution among the options. May not be the “best” technology but holistic decision - in the sense, perhaps, of how they fit into Oracle’s management strategy/plans.

Oracle licensing is notoriously unfriendly for virtualization. What’s going to happen to MySQL’s more virtualization friendly licensing? Goes away?
Currently, MySQL priced at $5K per server not per socket. Oracle will change this to per socket. So you should expect some price increases but subscription model will continue.

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