It's been a few weeks now since database giant Oracle announced it is acquiring Sun Microsystems. In those weeks, several questions have arisen regarding how the new company will look and operate. Will Oracle hang on to Sun's hardware product lines? What about the open source projects? Should Sun's customers be looking for alternatives?
Wednesday, SkillSoft hosted an Analyst Perspectives teleconference in which three industry analysts presented their answers to these and other questions. Books24x7/SkillSoft's Jim Zimmermann moderated the panel, which included Robert Frances Group's Cal Braunstein, Bill McSpadden from PWR Consulting (formerly Plant-Wide Research), and Datamonitor's Vuk Trifkovic.
From the start, Braunstein said he was "unclear" how Oracle would use Sun's product line to achieve the financial goals the company has in mind. Though Sun's software is valuable, he said he expects the hardware products to be sold or leased. Braunstein also echoed what I've read a few times before: There will be "deep cuts" in personnel -- to the tune of 10,000 employees. "This will impair... Oracle's ability to drive revenues from the Sun products," he said.
As for Java, Braunstein says Oracle may "devote energy" to Java's innovation, but will most likely use it for internal purposes, which means the future of JavaFX, NetBeans and OpenOffice is "cloudy," in his view. MySQL will probably be used as an "open source entry point" for Oracle's database offerings. "That should be a no-brainer for them," he says.
All in all, he says there will be some technical synergies between the two companies, but organizations that rely heavily on Sun hardware should be prepared for the changes to come.
McSpadden, on the other hand, says Oracle is seeking to become an IT powerhouse with its purchase of Sun, and though the merger may be "one of the most complex" the company has taken on, it will happen -- in large part because Oracle has had lots of practice. It will require "a significant shift" for Sun, but gives the struggling company "access to a powerful sales pipeline and potentially a new market in bundled products." Pointing out that Oracle and Sun have had a good relationship for years, he said simply, "Oracle has an outstanding track record for making complex mergers pay off."
Java and Solaris will be big assets to Oracle, he says, but like Braunstein, he's not sure where Sun's hardware line fits. Unlike Braunstein, though, he's taking more of a "wait and see" approach. "It's way too soon to make any major moves in that arena. It's very difficult at this stage to determine how this whole operation will play out," McSpadden says. His advice to IT shops: "Don't make any sudden moves....It's appropriate to contact Oracle and or Sun to test the waters with issues you have about the merger... But it's way too early to form any conclusions."
The final presentation came from Trifkovic, who agreed with Braunstein that it will be difficult for Oracle to make the profit that it's projecting on the deal, and agreed with McSpadden that "it's a very complex merger with lots of moving parts." Ultimately, though, he said the deal is a good one for Oracle.
However, he had a completely different take on what Oracle would do to make it successful. And it hinges on what Oracle does with Sun's hardware.
Trifkovic laid out two possible scenarios:
1. Oracle will divest the hardware and focus on Solaris, MySQL and Java, which Trifkovic calls "highly strategic" assets in today's software industry. But MySQL's users shouldn't be overly concerned. He says, "The constellation of forces in the nexus between the MySQL user base and Oracle is such that it's going to basically keep it in a finely balanced situation where neither side is going to be able to make any quick or fast moves." In fact, Datamonitor believes that MySQL and Oracle's databases are complementary products. He stresses that Oracle will need to be careful what it does so as not to completely disperse the MySQL user base.
2. Oracle will keep Sun's hardware lines. "There's huge mileage in pushing a vertically integrated systems-based approach," Trifkovic says. To do this, Oracle would concentrate on selling more appliances. Or, he says, the deal may open up a new area of cloud computing for Oracle in software-as-a-service offerings. He admits the scenario is still rather "fanciful" and there's no indication really that Oracle will take this approach, but it would "unlock the value of the deal" for Oracle.
Like his colleagues Braunstein and McSpadden, Trifkovic stresses that it's too early for IT managers, or vendors who partner with either Sun or Oracle, to make any decisions on what this deal will or will not change about their infrastructure or their service contracts. "You don't want to act too hastily," Braunstein concluded. Trifkovic reiterated the same, specifically to those who are heavy open source users. He says, "Don't have a knee-jerk reaction, and thereby jump from the frying pan into the fire."