by Martin Veitch

Red Hat, Ingres and Tibco CEOs shine light on Oracle-Sun merger

Apr 29, 20095 mins
IT Strategy

My final word on the Oracle-Sun (Snoracle) merger from CIO May print issue:

CIOs will be mulling over their server and database strategies after Oracle agreed a deal to buy Sun Microsystems last month.

Oracle, of course, is the biggest provider of database software in the world and now adds the most important open-source database technology to its mix through the addition of MySQL, acquired by Sun earlier this year. The deal also marks Oracle’s first serious attempt to compete in enterprise hardware, leading some to suggest that relationships with other platform providers could be negatively affected.

In a conference call, the top brass of the two firms suggested that the $7.4bn merger is an attempt to come up with an integrated solution. Oracle chief executive Larry Ellison said Oracle programs would “tightly integrate with Solaris”, describing the Sun OS as “the best Unix technology available” and Java as “the single biggest software asset” ever bought by his company. Linux was the second-most important platform and “remains extremely important”, he assured customers, adding that with Sun on board, Oracle can offer a “database to disk” integrated solution.

Sun’s chairman Scott McNealy and CEO Jonathan Schwartz both said the deal was “momentous” and McNealy added that this was “two technology titans” joining forces, but perhaps the most significant words came from Oracle CFO Safra Catz who pledged to build “substantially higher margins” from Sun and, with hype-squashing adherence to fiscal facts, that the deal was “larger than Hyperion, smaller than BEA or PeopleSoft”.

IBM was widely expected to come back in for Sun after the pair couldn’t close earlier, well-publicised merger discussions but it is close to certain that this agreement will stay intact, even if regulators elect to scrutinise the deal closely.

Some watchers said that the Oracle-Sun combination could help revive an old alliance but many noted that there is going to be lots of scope for complexity and mess. Oracle will have a difficult-to-impossible job convincing other hardware partners — notably Dell — that the playing field has not suddenly become a hill. There are also many potential casualties from crossover in respective database and middleware offerings.

Vivek Ranadive, CEO of enterprise middleware giant Tibco, said the deal is “very bad for customers. They don’t want to put even more eggs in the Oracle basket [and] Oracle plus open-source is an oxymoron. Can Larry Ellison be trusted with Java? Is he going to keep it unbiased or manipulate it to his own ends?”

Ranadive described Oracle as “the CA of the client/server era” and “a supermart”. He also predicted that SAP’s dependence on Java, the Oracle database and BEA WebLogic application server could also leave it wounded by Oracle-Sun. IT services giant Accenture could be next in line for Oracle to buy as “Larry wants to be an IBM”, he concluded.

Red Hat CEO Jim Whitehurst said he has no plans to buy a database company to counter the Oracle-Sun deal, and plans to instead be the “Switzerland” of enterprise software.

“We were a bit surprised like everybody else [by the deal],” Whitehurst said. “We’ve got good relationships with both and we assume that will continue going forward.”

Rather than hitting back by building out a stack of its own, Red Hat will seek to become the neutral party, providing horizontal capabilities and standards-based architecture that will let buyers plug in elements of choice. “The beauty is that you don’t have to worry about us locking you in later,” Whitehurst added.

Red Hat would act as the Switzerland of software “or a less polite way of saying it is to say we’ll be herding cats”, he joked.

Asked whether it would make sense to buy in a database of its own to provide a pre-integrated solution, Whitehurst said that Red Hat had no plans, although “I never want to say never”.

Ingres CEO (and former New York Stock Exchange CTO) Roger Burkhardt warned enterprise software customers to watch out for sharp hikes in pricing as giants take advantage of their powerful positions.

“There’s a technology lock-in and you’re not going to have any influence,” he said. “The other side is commercial lock-in; people are concerned about the commercial power Oracle has.”

Gartner analyst Andrew Butler described Oracle’s move as “both bold and risky … it emphasises Oracle’s determination to be taken seriously by the market as a full datacentre vendor. We are seeing more and more verticalised strategies from established systems vendors, and now players like Cisco and now Oracle, who have never had a major server or storage presence in the past. These radical new strategy shifts will put pressure on the whole market, creating new appliance opportunities and putting pressure on existing relationships. End users must show due diligence in selecting vendors — and vendor alliances – wisely”.

Most CIOs will wait and see before changing strategies but some are clearly concerned.

“I think we’ll need to rethink our MySQL plans now that Oracle have hold of Sun,” wrote Telegraph Media Group CIO Paul Cheesbrough on Twitter. “Can’t see them embracing a free-of-charge database.”