Sun-Oracle FAQ: Did IBM make a big mistake?

The deal gives Oracle control over the Unix-based Solaris operating system and Java programming language. A silicon.com panel of experts predict how this will affect the tech industry.
Written by Tim Ferguson, Contributor
Oracle's proposed $7.4bn acquisition of Sun Microsystems has shaken up the tech industry.

The mega-deal, which comes soon after IBM's bid for Sun fell apart, strengthens Oracle's hand in the software market and gives Oracle control over the Unix-based Solaris operating system and Java programming language. More dramatically, it could pave the way for database giant Oracle to become a systems vendor.

So what are the challenges for the players involved, and the implications for the industry as a whole? We asked a panel of expert analysts to weigh in on various aspects of the deal.

See also: Special Report: Oracle buys Sun - and Java

How will the deal change Oracle and how is Sun's technology likely to be used?

Stefan Ried, senior analyst at Forrester Research, said: "Oracle will value Sun's software stack and use the open source alternatives to complement their portfolio of mostly commercial software products today. Oracle will be able to turn the Sun deal into a best practice of the packaged apps [and] hardware combination and be a serious threat to IBM."

Phil Dawson, research VP at Gartner, said: "I think the real choice is Oracle becomes a systems vendor. How far they go with the hardware is the question. Oracle don't generally sell things you can touch."

David Mitchell, senior VP of IT research at Ovum, said: "The hardware business in an interesting one. Where I see that going to add value is in the development and deployment of a number of appliances. It gives [Oracle] a good open source community base which I think is a valuable thing for any software vendor at the moment. Sun has a strong support and maintenance revenue stream associated with both its hardware products and its software ones. That's quite an attraction to Oracle."

What impact will the deal have on other tech industry players?

"[The acquisition] isolates IBM straight away because IBM didn't buy Sun. Two weeks ago IBM could have dominated nearly two-thirds of the Unix market and this week they'll be lucky to dominate a third of it. IBM missed the boat here. I think Solaris is a real threat here for IBM," Gartner's Dawson said.

"[Red Hat was] close with Oracle then Oracle did unbreakable Linux. Now Oracle might say let's move everything to Solaris X86 - it's unbelievable. It makes a very complex portfolio but it also means people are very, if not loyal, tied to Oracle."

Research firm Technology Business Research (TBR) said in a note: "Oracle may spin off or sell off some parts of Sun’s hardware and software business following the acquisition. Likely purchasers of Sun's hardware business include Fujitsu, EMC, Dell and HP."

What about the industry in general?

Ovum's Mitchell said: "The market's really condensing into four large players at the moment - IBM, HP, Microsoft and Oracle, after this acquisition, are really the largest around. It's moving [Oracle] into that category."

TBR said: "[The deal] allows Oracle to remain the great white shark of the IT industry, driving growth through a voracious appetite for leading technology companies".

What implications is it likely to have for Sun and its customers?

"The Sun guys are going to be a little happier. They know that they're going to have an enterprise Unix strategy moving forward. They know they've still got Solaris. It makes a very complex portfolio but it also means people are very, if not loyal, tied to Oracle," according to Dawson.

Mitchell said: "Oracle is a very commercially astute company - they are unlikely to do anything to damage customer satisfaction and the way that they support customers."

This article was originally posted on silicon.com.

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