Oracle to Buy Sun

Oracle Buys Sun (from Oracle.com)  |  Sun and Oracle (from Sun.com)

Earlier yesterday, Oracle has announced that it has reached an agreement to purchase Sun Microsystems for $9.50 per share, making it a $7.4 billion deal, by this acquisition, Oracle will have a complete end-to-end product line that focuses on data and business requirements in the largest enterprises.

Oracle has been trying to enter the hardware business lately by its HP Oracle Database Machine, which is essentially a complete rack of HP hardware and Oracle Software, but this last acquisition will bring Oracle completely into the major hardware business, this will give it a complete line of products, from the largest UltraSPARC supercomputers Sun creates and maintains, to its mid-range SPARC servers, , to its Blade servers and high-density computing, to its carrier-grade Netra servers, to storage-oriented servers, to the entry-level x86/x64 servers, down to workstations and thin-clients; not to mention a complete processor architecture and alliances with both the major x64 market players, Intel and AMD.

Oracle will also get a complete software stack to build complete systems using its Oracle software, this includes the Solaris/OpenSolaris operating system, which is (quoted from the Oracle press release) the largest platform Oracle is deployed on, the bleeding-edge ZFS storage engine, the Lustre filesystem which is geared toward clustered supercomputers, and engineering expertise Sun have for building such large-scale installations.

But the crown jewel in this purchase is definitively the Java platfrom, Oracle has been the third-largest contributor to the Java environment (after Java's Own creator Sun, and IBM with its Eclipse/Rational product-line and its WebSphere middleware), Oracle has its Oracle Fusion Middleware product-line which it enhanced by its acquisition to the BEA WebLogic product line, its JDeveloper IDE product, it contribution to the Eclipse Foundation, and its native support for Java inside its core Database product-line.

Oracle will also benefit from Sun earlier acquisition to MySQL, which fosters its position as the major (and mostly the only) player in Linux database business (keeping only the relatively smaller player PostgreSQL) and IBM current offerings, DB2/Informix which focuses more on IBM integrated services/platform than being an active player in the Linux market. 

Oracle does have overlapping products with the Sun portfolio, like its GlassFish Application Server (which overlaps with Oracle Application Server and BEA WebLogic), its NetBeans IDE (which doesn't completely overlap, but somehow, with the JDeveloper and the contributions to the Eclipse foundation), its MySQL database product (which is not positioned as a direct competitor to the Oracle database, but none the less it has managed to grab a good market share in the Internet-centric database field), and its open source VirtualBox virtualization software (which overlaps with the Oracle VM product, which is based on Xen).

This is no where the overlap that was to be there if the deal with IBM has managed to succeed, it would give the new IBM overlaps in its complete hardware business (which Sun competes across the complete line), its processor business (the POWER vs. SPARC), its Operating Systems business (Solaris vs. AIX & z/OS), its development tools business (NetBeans vs. Rational/Eclipse), its application server business (GlassFish vs. WebSphere), and its database business (MySQL vs. IBM DB2/Informix); this would leave IBM with just one piece of software it really wants from Sun (beside its server market-share), which is of course the Java platform, and quite frankly, it is not worth the $7.4 billion Sun was asking for (which is the same price Oracle agreed on to complete its acquistion). 

I was worried that such a merger/acquisition would make too much mess in the Sun portfolio, but now as Oracle is the new Sun, I'm not so worried; Oracle will benefit directly from the hardware business, the processors business, the Operating Systems business, the Java platform, the office productivity products; and will have minimal impact on the development tools and the virtualization products; the remaining parts where Oracle will probably have a major impact is the database business and the application servers business (which are minor parts in the Sun products line).

We will see how such acquisition will result in the near future, and how the open sourcing of many products of Sun will shape the future of such products.