News

Analysis: Oracle-Sun Strengths, Weaknesses, Opportunities and Threats

• By Mike Schiff
• 05/01/2009

Strengths:

• Oracle will be able to offer complete OLTP and analytic solutions that encompass processors, storage, database, middleware and application and business intelligence software. This will serve to strengthen its competitive position relative to hardware/software rivals such as IBM.

• Sun and Oracle have been partners for over 20 years and have an established history of successfully working together.

• Oracle will now control the Solaris operating system and the Java programming language and associated technology, both of which are well-established, respected and widely deployed.

• Sun's Solaris operating system is the leading platform for hosting the Oracle Database while the Oracle Fusion middleware product line uses Java as its foundation.

• Sun's MySQL database will help Oracle expand the number of software developers that use Oracle database products. It will also serve to enlarge Oracle's prospect audience by providing an additional entry point into the small-to-midsize business (SMB) market.

Weaknesses:

• By stating that it can "optimize the Oracle database for some of the unique, high-end features of Solaris," Oracle raises questions about its future intentions toward other operating systems. Oracle did, however, state that it is "as committed as ever to Linux and other open platforms."

• In an effort to fortify its data warehousing presence and fight off competitive threats from vendors such as Netezza and Teradata, Oracle has teamed with HP to produce the HP Oracle Database Machine and the associated Exadata Storage Server. Oracle's acquisition of Sun will raise concerns about the future of these offerings.

• As it is not yet clear how Sun's products will evolve under Oracle's ownership, the pending acquisition will serve to dampen Sun's sales as prospects refrain from making commitments until some of the uncertainly is resolved.

• In addition to database products, Oracle and Sun have several overlapping offerings, including master data management solutions and middleware technology. Oracle will need to make hard decisions about whether to support multiple solutions or favor some over others.

• Sun has suffered year-to-date losses of over $2 billion for the first nine months of FY 2009 (period ending March 29, 2009) versus profits of $315 million for the first nine months of FY 2008, on declining revenue of $8.8 billion versus $10.1 billion. Its acquisition by Oracle is likely to be considered a "rescue" effort.

• Although Java has a strong enough industry presence (so much so that Sun uses it as its stock exchange ticker symbol), it was not considered to be a strong revenue generator for Sun.

• Oracle can use Sun's MySQL database (acquired in February 2008 when Sun acquired MySQL AB) to target SMB organizations and software developers and later upsell them to the Oracle Database.

• Oracle can develop and market pre-integrated hardware/software solutions and emphasize how they will reduce customer deployment costs.

• Oracle should stress that it has previously acquired and continued to support several database products including Berkeley DB, Digital Rdb, InnoDB and TimesTen and that it will continue to evolve and support the MySQL database.

• Oracle can use Sun's StarOffice productivity suite to attack the desktop (and laptop) dominance of Microsoft Office.

• Should it decide to remain "hardware-neutral," Oracle could conceivably sell Sun's hardware business to another hardware vendor.

Threats:

• Although HP and Oracle have long enjoyed a strong "co-opetition" relationship, by becoming a direct hardware competitor to HP, Oracle will severely test the HP/Oracle partnership.

• Other hardware partners such as Dell or EMC might further align with non-hardware vendors such as Microsoft.

• Organizations using operating systems other than Solaris and Linux (in particular, proprietary Unix platforms) are likely to be concerned about Oracle's stated intention to optimize the Oracle Database to take advantage of some Solaris features.

• Sun's competition will likely target its installed base with migration offers while raising concerns about Oracle's future support for various Sun products after the acquisition is completed.

• In general, the acquisition of Sun will stress many currently strong partnerships between Sun and competitors of Oracle as well as between Oracle and Sun's competitors.