Oracle buying Sun looks a little odd at first glance. Isn't it just a software leader buying a dying systems supplier? It's more because it answers a long-outstanding question in information technology (IT) and enterprise software market research. The question goes roughly like this:
"In the long run, will IT Company X (Oracle in this case) tend to become a technology provider, an IT services provider or an IT-enabled business services provider?"
Sticking to being simply a provider of one type of technology is no longer a tenable position for large enterprise software or IT providers given the scale of the market and competition. That's why in a recent blog post here I suggested that SAP might be in the hardware business soon (in fact, SAP's CEO suggested it). It's why GM grew to make trucks and buses and other types of transportation in addition of horseless carriages in the early part of the last century. (That may turn out to be a good analogy for a bad outcome, but that won't happen for 20-30 years.)
To provide some contemporary examples, Intel is a technology provider, and wants to sell to all the players above it in the stack. HP - particularly with the acquisition of EDS - is becoming an IT services provider, and increasingly does not want to compete with other systems suppliers such as Dell. Google is and IBM is becoming an IT-enabled business services provider. None of these changes happen overnight, but they illustrate clear trends.
Oracle has been stuck in the seams between two of these three categories: not just a technology provider, and not just an IT services provider. With this acquisition, Oracle declares it wants to be a technology provider. In fact, a stated goal of the acquisition is to make systems integration, one of the leading functions of IT services providers such as HP, go away.
Oracle said it was key for it to own Java because Java underlies its Fusion middleware. Oracle wants to make sales of Fusion as large as its database business (approaching $10 billion according to published reports), which would mean more than tripling the middleware business (if I subtract the published reports of the database business' size from the SEC reported Oracle database/middleware total).
To the extent that is Oracle's intent, what does it mean for Sun's two or three-year-old movement to open source terms and conditions. I don't think I saw the term "open source" anywhere in the FAQ sheet except in reference to Sleepycat and Innobase, open source products Oracle acquired years ago. Oracle said good things about MySQL and Linux but better things about its current open source database products and Solaris. I think it's too soon to read anything into such factoids other than that Oracle hasn't yet figured out a new open source strategy. It's hard to make money on open source terms and conditions and also be basically a technology provider. Red Hat has done it on a small scale, but it's unclear whether Red Hat's model will scale up.
The executives took no questions at a conference call today. That's great news for bloggers: we can opine on this subject for weeks until the deal closes..