Now that European regulators have OK'd the Oracle-Sun deal, Sun Microsystems' partners at least know that the storied hardware company has an official home with Oracle. Now they worry about how welcoming this new home will be.
By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.
They know that Oracle does not share recurring maintenance and upgrade revenue with partners, as Sun has done. BEA Systems partners found this out the hard way when Oracle bought that company two years ago and they lost that important annuity.
Now, it's Sun partners' turn to stress out. Many of them rely heavily on maintenance renewal revenue, which could well disappear.
On the plus side, the fact that the Oracle-Sun deal remained uncertain nearly a year after its announcement, caused some customer reticence about buying new Sun hardware or software.
"We got this cloud off our horizon and that is good," said Derek Small, founder of Nulli Secundus Inc., a Sun and Oracle partner based in Calgary, Alberta.
A Sun partner based in the Northeast concurred. The uncertainty around Sun "caused customers to hesitate and then the economy made it worse. Any delay to sales in this world is bad," he said.
This partner, who requested anonymity, is optimistic in that Oracle has proven itself "an animal with process [when it comes to acquiring companies] and it knows how to monetize technology."
On the other hand, he has seen firsthand how Oracle's rough-and tumble direct sales culture can hit partners where they live. Oracle gets the renewal and maintenance revenue and it also wants the license sales revenue, he said.
Mike Clesceri, executive vice president for Laurus Technologies, a Sun and Oracle partner, acknowledged concern that Oracle will take Sun renewal revenue for itself, although he said that is by no means a done deal.
"We need a plan for our business no matter which way they go. I know how much our renewals are … we have other software vendors who have gone back and forth. Some pay for renewals, some don't, some change that and we have to adjust," Clesceri said.
Another Sun partner said even if Oracle takes renewals direct, it would take year or more for it to set up infrastructure to do so.
Oracle VARs see more contention for deals
Scott Jenkins, CEO of The EBS Group in Kansas City, said the influx of Sun partners into the Oracle software ecosystem will increase already tough competition for software license sales. It doesn't help that Oracle's own direct sales team continues to compete for license sales deals to make their own quotas.
The combined Sun-Oracle channels "will hurt some partners because now there will be even more competition for deals. Oftentimes, it's the hardware partner that identifies that a technology refresh is coming up and would be the first to PRM the deal. And he who first PRMs the deal gets Oracle's sales support," Jenkins said. PRM is Oracle's partner relationship management system in which partners are supposed to register new deals in order to claim them.
On the other hand, Jenkins said there will be fewer Oracle salespeople in the field also competing for those deals.
Nulli Secundus was impacted by Oracle's purchase of Oblix Inc., a small ID management company.
"We voiced that concern then and the reality was Oracle took something off our plate but told us [that] what we gained from their direct sales channel and more volume customers would more than make up for the lost support revenue, and, in reality, that turned out to be true," Small said.
"You'll always find some partners that are like a puppy that can't let go of the sock. Other partners move on, recognize the change and get over it."
Oracle-Sun deal eases mix-and-match deals
Small said convergence from the Oracle-Sun deal will only help his business.
"Our customers liked to pick and choose … they might want Sun's identity management, a terrific product, which is mature and robust, but may have wanted Oracle's access management … and it was a pain to deal with both companies that were trying to sell their full stack," Small said.
Oracle-Sun deal changes Oracle ecosystem -- a lot
One point of agreement is that the channel ecosystem of Oracle-Sun will change drastically.
Several partners said they expect smaller VAR shops to get shaken out completely.
One technology exec at a financial services company who used to head a large systems integrator expects third-party integrators "to take a hit over time."
"Sun's disks are from [Hitachi Data Systems], and most maintenance and support went back to them when the Oracle bid was announced. Part of Oracle's challenge is building or at least integrating a hardware support organization -- a different requirement from software support. VARs and integrators will have to adjust," he said.
The northeastern Sun partner summed it up: "Oracle goes direct so often -- I think small partners will perish in the Oracle world."