Questions are still swirling about the fate of Sun hardware now that the company is about to become a unit of software giant Oracle Corp.

Although it's likely that technologies like Sun Fire and Sun Blade, and even the SPARC processors, will live on even if Oracle decides to spin off the hardware business, a lot of Sun users would certainly breathe easier if the whole company remains more or less intact.

At the moment, the signs point to Oracle's continued commitment to Sun hardware. In its most recent SEC filing, the company said it will retain the hardware business, if only to focus on customers that the two companies already share. While that still leaves plenty of wiggle room should Larry Ellison change his mind, at the moment the company is talking about the convergence of "hardware, database, middleware and applications."

Despite that happy talk, though, business is still business. And the fact is that the IT hardware industry is in the dumps and will likely remain there for quite some time. IBM's latest financial statement points this out. The company's Systems and Technology Group saw a 23 percent drop in sales, led by a 27 percent drop in its commodity System X server. Blame it on virtualization and the fact that some of Big Blue's primary customers, the banks, just are not in the mood for any major capital outlays at the moment.

There's also the fact that Oracle will face some pretty stiff competition for this dwindling market. The combined Sun-Oracle lineup pits it against not only IBM and HP, but the likes of Cisco, Broadcom and even VMware and Microsoft as all these technologies converge on the cloud. Oracle has acted as a quasi-partner to many of these companies in the past, but will now have to realign itself as a full-scale competitor.

But even if it wanted to, shedding that hardware may prove to be more difficult than many expect. Despite the pending merger, Sun has taken a number of steps to integrate its hardware and software platforms to an even greater degree. At this week's MySQL Conference in Santa Clara, Calif., for example, the company unveiled a new reference architecture designed to integrate hardware like the Sun Blade 6000 and the Storage 7000 disk array with MySQL Enterprise Server running on Solaris 10 or Linux with a dash of the Glassfish Web application on the side. The company says it can work up about 20 dual-Nehalem Sun Blades tied to a 7410 array with virtual networking to support up to 1 million Web users, all for about $20,000.

At this point, both options represent a gamble for Oracle. If it decides to keep the hardware business, it probably won't be self-supporting for some time and will have to be valued only by its ability to support the software side of the house. On the other hand, if it sheds the business it may find that it can't push new capabilities like virtualization and cloud computing as much as needed to compete against the entrenched players.

Either way, Sun would become a huge albatross around Oracle's neck.