In-Depth

Oracle Uses OpenWorld to Reassure Skeptics but Concerns Remain

• By John K. Waters
• 10/16/2009

Oracle used this week's OpenWorld conference in San Francisco to roll out new tools aimed at providing better integration of its disparate wares, but much of the focus at this year's annual event was on the company's pending $7.4 billion agreement to acquire Sun Microsystems.

Top officials of both companiess made a full-court press to convince skeptical stakeholders that the merger will not be detrimental to the futures of Java and the MySQL database, while giving Oracle the ability to break new ground with Sun's hardware and system software technology.

"Sun and Oracle will provide one of the greatest innovation opportunities of all time," said Sun Chairman Scott McNealy in his keynote address. He argued that Java, MySQL and Sun's SPARC processor family will be in good hands at Oracle. "We shouldn't be worried because most of Oracle's products are built on Java; MySQL is an open-source, GPL'd database that competes with Microsoft, not Oracle; and Oracle has promised to spend more money developing SPARC than Sun does now."

Concerns Abound
Analysts believe that Oracle has a vested interest in preserving Sun's key assets and don't anticipate major changes. However, there is plenty of skepticism among industry watchers. One skeptic is Forrester Research Analyst Jeffrey Hammond, who doesn't buy Oracle's argument that MySQL doesn't compete with Oracle's flagship database. Hammond has found a fair amount of concern among companies that have built their applications strategies around Java about Oracle's behavior once the merger is consummated.

"I wouldn't make any strategic decisions about my application platform strategy right now, or for a good six months after the acquisition is actually completed," Hammond said. "By then we'll get a much better picture of the true intentions of the combined company."

Ovum senior analyst Tony Baer worries that taking on Sun's hardware business could prove to be an unproductive distraction for Oracle. "There's some concern out there that Oracle will lose its focus. I mean, [Oracle CEO] Larry Ellison spent three-quarters of his keynote [on Thursday] talking about hardware benchmarks," Baer said.

"That said, keep in mind that for years Sun was Oracle's reference machine," he added. "Oracle was historically optimized on Solaris and SPARC. Now Oracle is saying, we may as well put our software stack on some dedicated iron and optimize the hell out of it. You're going to see servers that perform some specialized functions when you start putting this stuff out in the cloud, and they are determined to come up with the most blazing fast Fusion Middleware machine possible. And I think they're going to try to keep SPARC going for that purpose."

IDC analyst Al Hilwa agrees: "For right now, the two companies have shown great cooperation on the benchmarks and on the Exadata V2 machine,"" which suggests that one future of enterprise software is high-end integrated appliances," Hilwa said. "I think that is a great vision, but it will be a challenge for Oracle to take a $10 billion dollar hardware business and run it with anywhere near the same margins as its software business."

The Fate of Java
As for the fate of MySQL and Java, Hilwa said the company has a vested interest in advancing, not fracturing, them. "Oracle has built its most strategic product lines -- Oracle Fusion Middleware and Oracle Fusion Applications -- on Java," Hilwa said, adding that Oracle likely moved to acquire Sun out of concern that Java might end up with one of its key competitors.

Hilwa noted that there is precedent for taking Oracle at its word. He noted that Oracle has acquired other databases in the past, including InnoDB (the transactional back-end of MySQL), TimesTen and Berkeley DB, which is an open source product much like MySQL. "These businesses are doing fine inside of Oracle," Hilwa said.

Oracle also leverages open source technologies like the TopLink middleware product, added Hilwa. "What's more it might help them in mid-market accounts where they typically are not as prevalent," he said.

RedMonk analyst Michael Coté believes that Java is probably as safe in the hands of Oracle as it was at Sun. "There are enough people using Java (and with their own VMs) that Oracle couldn't do long term damage with any rug pulling," he said. "I'm not sure they'd really care to mess with Java. I am interested in exactly what Oracle will do with SPARC and Solaris to make it more widespread than it currently is. Sun had a long time to figure it out, and I'm not sure what the folks up the street from them have figured out that Schwartz and company haven't already tried."

Integration Nation
While the merger was a key focus at OpenWorld, Oracle also addressed another concern among its customers and partners: how it will integrate its disparate offerings. As reported earlier this week (see Oracle Promises Integration of Disparate Wares), Oracle outlined planned upgrades to its Fusion Middleware 11g platform, which rolled out this summer (see Oracle Releases Fusion Middleware 11g and JDeveloper Update).

Ellison also closed the conference by outlining its blueprint for Oracle Fusion Applications, which integrates several in-house-developed and acquired technologies currently in the company's app portfolio. The first release will include modules for financial management, human capital management, sales and marketing, supply chain management, project management, procurement management and governance, and risk and compliance, Ellison said. The Fusion App suite will come with embedded business intelligence and analytics software, he said, and it will be deployable on-premise and in the cloud.

"Fusion Apps are built to be SaaS- or cloud-ready," Ellison said in his closing keynote, "We are committing to their service level, which means we have to have a way to monitor their performance to make sure we are delivering the promised level of performance."

Ellison also promised the Fusion App suite would not replace such Oracle applications as E-Business Suite, PeopleSoft or Siebel. The company will, however, provide a new feature that will allow users of those products to download selected Fusion Applications.

"We're a pretty big software company," Ellison said, "so we can afford to build the next generation of applications, as well as maintain the old ones. So as a customer you can move if you want to, when you want to."