Analysts advise caution on Oracle-Sun deal

Acquiring Sun elevates Oracle to 'powerhouse' status, but CIOs should wait for its hardware and middleware roadmaps before deciding on licence agreements, says Gartner

Acquiring Sun elevates Oracle to 'powerhouse' status, but chief information officers should wait for it to announce hardware and middleware roadmaps before deciding on their licence agreements, say analysts.

Gartner sent out a statement on Wednesday saying the takeover marks the first time a large software company has bought a large hardware company, giving Oracle "the opportunity to become a powerhouse vendor in both software and hardware, potentially rivalling IBM and HP".

It said the two vendors' combined product sets will give it a vertical "integrated" stack to offer customers, but that customers should wait for Oracle to lay out its hardware road map before any long-term plans.

Customers on Sun's Sparc hardware should protect their investments by locking in longer support agreements of five to seven years, said Gartner.

The analyst firm also recommended chief information officers stay cautious before committing to Sun middleware products. It added: "As a precautionary measure, current Sun middleware customers should begin to evaluate alternatives and, if appropriate, develop a migration strategy."

A Technology Business Research (TBR) analyst said the software giant will have to invest "significant sums of money to continue the hardware business as-is".

TBR said Oracle may have to streamline the Sun server product line as a result, and focus on x86 machines. It also listed likely purchasers of Sun's hardware business: Fujitsu, EMC, Dell and HP.

Vendor consolidation: What CIOs should expect
The Gartner report also noted Oracle faces a challenge in terms of customers who may not want to source for their enterprise stack from a single vendor.

Ovum's senior vice president of IT research, David Mitchell, said he thinks companies may benefit from Oracle's vertical offering. In an emailed statement, Mitchell said: "Historically, it may have been prudent for CIOs to spread their spending across multiple suppliers, using competition between suppliers to keep prices keen."

However, the wide portfolios of giant vendors such as IBM, HP, Microsoft and Oracle may present chief information officers with better bundled enterprise-licensing agreements, he said.

Mitchell said chief information officers resistant to procuring from a single vendor may have to accept that the IT landscape is consolidating, and that dealing with single vendors may be a trend that continues to gather momentum.

He said: "We are now entering a market context where the 'big four' will equate to IBM, HP, Microsoft and Oracle. These suppliers will, between them, define a significant proportion of the IT market landscape for the next 10 years or more."

As a result, other vendors need to focus on specialisation, rather than try to scale to match the four, he said.

TBR said Oracle is in a good position to provide unique combinations of Oracle and Sun products.

One potential appliance could fuse Sun server and storage hardware with Solaris and Java software, together with Oracle's database and Fusion middleware, it said, addding that this "unique" offering would enable Oracle to "rapidly penetrate the small and midsize market".