Oracle Corp surprised many observers by forking over approximately $7.4 billion to buy Sun Microsystems, thus moving instantly into the hardware business. It’s the closing move in a game where Sun spent months looking for a buyer, and it also creates a software-hardware titan that can battle with the likes of IBM.
Oracle’s CEO Larry Ellison sums it all up: “The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems…Oracle will be the only company that can engineer an integrated system–applications to disk–where all the pieces fit and work together so customers do not have to do it themselves.”
On the surface it’s a similar move to Cisco’s purchase of Pure Digital earlier this year–a big player attempting to move into a totally new market. But this deal’s on a much larger scale and represents a truly dramatic transformation for Oracle–the company previously “made” nothing, but has acquired a serious manufacturer with a valuable historic name in the computing market.
The real jewel in the purchase, however, is a piece of software that Oracle will relish getting in its hands: Java, or “the most important software Oracle has ever acquired.” It’s particularly neat for Oracle since its Fusion Middleware package is already based on Java, and it’s the company’s fastest-growing business. Sun’s Solaris OS is also the “leading platform” for the Oracle database, and that’s so because the two companies have been business partners for over 20 years. Buying Sun gives Oracle direct control over key technology that enables the rest of its business to work.
There are two important implications that arise with this purchase. For one, in buying Sun, Oracle sets itself up as a rival to IBM, HP and Cisco Systems in the enterprise hardware market. That’s particularly interesting since Sun apparently turned down a similarly-sized purchase offer from IBM previously. The new competition in the enterprise hardware market could be good for driving down prices.
The second may be more serious for the average gadget user: It’s the question of the future of Java and MySQL. These are both technologies owned by Sun that enjoy a degree of open source status, and are used everywhere from PCs to cellphones to running complex back-ends behind websites. Whether Oracle plans to continue with this business model is unclear, and there could be complex knock-on implications that depend on Oracle’s next moves.