Oracle vs. HP: In This Divorce, You're the Kids and Dad's Nuts

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Customers Weigh In on Oracle Itanium Controversy

It's pretty clear that many IT organizations are dubious of Oracle's motives.

The Oracle vs. HP litigation keeps kicking up interesting tidbits and it increasingly seems like Oracle's position is unsustainable. From the outside and from the start it looked like Oracle was the cause of the breakup but is trying to maintain a very convoluted fiction so it can blame HP. (By the way, this isn't the only juicy legal action we are covering this week. Check out Don Tennant's coverage of the Infosys insanity).


The latest bit of amazing legal chicanery has Oracle arguing that when it agreed to continue to support HP as it had before it hired Hurd and then announced it wouldn't, it didn't really mean that because this somehow constituted a porting agreement, which would require more attorneys to work out.


I've seen folks argue that at the core of this is a $4 billion paragraph, but I actually think the number and impact is understated. I think at the core of this are the huge companies these two companies shared and the realization that only one of these companies is likely to keep them as customers. In effect, in a divorce, these are the kids.


I think the kids should have a vote; unlike children, they are actually paying the bills and taking all of the risks and so I think it is time to look underneath all of this and again at why Oracle, run by an aging CEO, increasingly scares the hell out of me.


The HP-Oracle Divorce


Like a lot of marriages, the HP-Oracle marriage looked pretty solid before the breakup. Both companies had aligned to compete with IBM, which collectively had software and hardware products that matched these firms' individual resources. Oracle had the reputation of being more aggressive in sales and in marketing, HP more nurturing - and, well, I'll get into trouble if I continue that analogy. I can feel my wife getting ready to whop me on the head.


HP and Oracle had a tight relationship and they had children from it: the 400 or so very large customers who bought their shared solution. Both were somewhat free to see others - this wasn't a merger after all - but it was far more than a casual partnership as there were formal agreements binding the firms together.


The divorce was triggered by Oracle effectively marrying a once-attractive, but now down-on-its-luck company called Sun with the hope of becoming IBM and establishing stronger customer lock-in. Oracle didn't want the kids to have wandering eyes and evidently the current relationship with HP just wasn't enough. HP subsequently fired its CEO for cause (the cause being he tried to cover up some part of an alleged attempt at an affair with a subordinate that HP funded illicitly).


Oracle (really Larry Ellison because they are one in the same) pulled the plug, and this is where it gets even weirder. Ellison claimed the cause is that Itanium will soon be discontinued. This would kind of be like a guy breaking up with a live-in girlfriend he'd had kids with after getting married to someone else because he'd heard his girlfriend might toss her favorite nightgown.


Think about it, these relationships on this class of system go on for years, often decades, after a technology becomes obsolete. Even if true, it wouldn't be grounds to discontinue it. And, as it turned out, it wasn't true and they knew it.


Sun was a train wreck. Even Oracle insiders said the hardware sucked - no that wasn't it, was crap ... nope that wasn't it either, smelled ... getting closer, oh yes, that's it, it blows, er, baaaallllooooooows. God, I love discovery. Pretty clear from these disclosed emails and texts that the rank and file at Oracle are no more fond of Mark Hurd than the rank and file of HP were.


Now in this story Mark Hurd is the dog, but a poorly behaved one because HP doesn't want him because he doesn't behave. On the other hand, HP doesn't want Oracle to have him because it is afraid Oracle will push Hurd back through the dog door and he'll make a mess. So Ann Livermore and Safra Catz sit down and agree that if HP lets Oracle have Hurd, Oracle will restore child support for their shared customers/children. It is clear from the disclosures that HP is trying to make sure its shared customers aren't disrupted and Oracle is focused on getting a dog, er, Hurd.


Current Drama


So the current drama is this: After the agreement was signed, Hurd went to Oracle, and then Oracle stopped support anyway, now claiming the agreement is invalid because it is basically a porting agreement and what they signed wasn't that.


Now, this is like that husband and wife agreeing to exchange the dog for child support and the husband not paying, claiming that this type of relationship was more like a corporation, which shared assets that would have required actually forming a corporation, so the agreement is void. This argument seems borderline insane.


Larry must really think we are all idiots; you have to wonder where he comes up with these strategies. Er, well maybe you don't. Oracle has a smart legal team; they clearly aren't driving this strategy any more than they were driving the failed one at Google.


Wrapping Up: You're the Kids and Dad's Nuts


Through this process you are getting a rare, deep look into two large companies that are positioning themselves to serve businesses like yours. Both firms have capable, talented people and both companies have both good and bad products. However, this fight exposes the heart of each firm, whether they are mostly focused on protecting you or seeking advantage at your cost.


Virtually everything that I've seen disclosed so far showcases HP as a company at least trying to do the right thing and its problems are the result of not being equipped to deal with the kinds of internal problems it's been having. I'm really not sure there are any companies that really are, but that does need to be fixed.


On the Oracle side, I can't even find where customers were considered. For instance, if you wanted to truly build Sun into a solution that would benefit customers you'd have hired a builder/turnaround expert like Michael Capellas or a well-rounded technology executive like Pat Gelsinger. You wouldn't hire a guy who is famous for making a firm look good while gutting it.


Sometimes choices are hard, but you still have to make them. Don't take my word for this; just watch the testimony and discovery from this trial and you'll likely conclude that while HP was clearly backstabbed, the Oracle customer was the victim. It stops being funny when the crazy guy starts hurting you.

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