Oracle hardware support plan stings Sun VARs

VARs say Sun shops may jump ship to HP or IBM hardware, given new Oracle hardware support policies.

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New Oracle hardware support policies for Sun Microsystems hardware aren't going over well with customers, according to Sun VARs.

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The Oracle hardware support changes mean significantly higher prices and less flexible terms than customers received before Oracle acquired Sun. Oracle made the changes in March, and several Sun VARs -- none of them wanted to be quoted by name -- said the reality is now sinking in.

"It's getting pretty bad," said a Sun integrator from a Western state. "Maintenance renewals and services are 3 times what they had been in terms of price."

Other VARs said those Oracle hardware support prices now range from two to three times higher, depending on the hardware.

Prepaid discounts, flexibility gone

For support on Sun hardware, Oracle now charges 12% of the hardware cost per year. In the past, there were different calculations depending on hardware type. But for large, pricey Sun machines, the old multiplier was typically 5% or 6%, according to one longtime Sun partner in the mid-Atlantic region.

"Before this year, a customer buying a Sun 5240 server got three years of support for $3,800, including a discount for paying for the three years at once," this partner said. "That same box will now cost $7,699 to support for three years."

Sun customers in the past could get a healthy discount by prepaying for three years of support up front. Under Oracle hardware support, that discount is now gone, VARs said.

At least one Oracle partner, who has been no fan of IBM in the past, said IBM will profit from Oracle's inability to adjust to selling hardware.
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And perhaps most important, Sun had been extremely flexible, letting customers purchase systems and then enabling support when the systems were installed. Now the support clock starts ticking on the date of purchase.

Unlike some other Sun partners, the Western VAR has not seen the newly reconstituted Sun hardware sales team try to take his accounts direct. But, he said, Oracle telesales has been calling his customers and offering them Sun hardware along with the Oracle software they usually pitch, and he is not amused.

Under the Oracle hardware support policy, Sun's Solaris operating system will no longer be supported on non-Sun hardware. There may not be a ton of customers running Solaris on IBM or HP hardware, but those that do will be looking for alternatives.

Another bone of contention for some Sun VARs is that Oracle ended the Sun Education Market Alliance Program (EMAP), although VARs can still apply for one-off discounts for education accounts. In the past, only a select group of Sun partners qualified for these discounts, and those VARs said the opening up of the program will hurt their margins.

Oracle would not comment on its hardware systems support policies (PDF) for this story. A spokeswoman pointed to Oracle PartnerNetwork specializations and training available to Sun partners.

Oracle hardware support opens IBM, HP doors

The biggest Sun shops will probably be able to force hardware-support concessions from Oracle, but midmarket shops won't have that clout, several VARs said. Their choice will be to pay up or find another vendor.

The Sun integrator from the Western state said his company is ramping up on both IBM and Hewlett-Packard hardware.

"We'll probably move more customers to HP overall," he said. "It's an easier choice at the low end in the Linux world. For high-end Solaris accounts, [IBM's] AIX is an easier move."

Despite Sun's very public travails over the past few years, many VARs kept their Sun accounts active as the vendor pared its internal sales force. Many of these same VARs had also been Oracle partners -- before Oracle started pushing commodity Dell and HP hardware over Sun SPARC machines -- but left Oracle because of its aggressive direct sales approach. Now that Oracle owns Sun, their sense of déjà vu is disconcerting.

Still, for all the channel and customer angst, it's difficult for IT shops to rip out existing gear, no matter how irate they might get about Oracle hardware support.

"Most Sun customers are not at all happy, but it's hard to move and I don't see a lot of forklifts coming in," said the Western state partner. "But I do think we'll see customers peeling off Sun systems over time in favor of IBM and HP."

Both IBM and HP have been actively recruiting the big Sun partners (and their Sun customers) and have gotten some traction. Big Blue has been playing up the IBM Migration Factory approach, which has impressed some Sun VARs.

Given that both IBM and HP are hungrily eyeing these Sun shops, smart VARs can wangle better deals with those vendors to poach Sun customers. And given that IBM sought to buy Sun, then dropped its bid before Oracle swooped in, there could be considerable upside for Big Blue if it can execute on its plans. At least one Oracle partner, who has been no fan of IBM in the past, said IBM will profit from Oracle's inability to adjust to selling hardware.

In January, just after Oracle's $7.5 billion buyout of Sun finally closed, this Oracle partner said, "That sound you're hearing is the champagne corks popping in Armonk."

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com, or follow us on twitter.

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