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VARs turn wary eye on Sun-Oracle combo

Partners aren't crazy about a match between Sun and Oracle, but Sun needed to do something to avoid certain extinction.

Some VARs see the impending convergence of Sun Microsystems and Oracle as a melding of two direct sales champions.

They view both Sun and Oracle as companies nurtured on an enterprise-oriented direct sales model that were forced into the channel when small and medium-sized businesses emerged as valued customers.

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"They didn't get SMBs so they needed us. But they still cut our throats whenever they get the chance," said one Midwestern VAR who has partnerships with both vendors and who has soured on the experience.

And many say Sun was forced to sell and that the $7.4 billion that Oracle is putting up ($5.6 billion when Sun's cash stash is included) is a gift.

"Oracle just pissed away $7.4 billion," said the Midwestern partner. He and others maintain that both vendors are masters of channel conflict that will do anything -- including cutting all VAR margin -- to win deals.

Worries over Sun's long-term viability sapped the company's sales and channels in recent months. Reports that a prospective deal to IBM spluttered didn't help, although some observers said Hewlett-Packard or even Dell would be a better acquisition partner than software-oriented Oracle.

"Sun had to sell to someone or go the way of the dodo bird," added Jeff Wilke, CEO of Data Media Solutions Inc., an Omaha-based VAR that does considerable government work and has partnered with both companies.

Still, some other VARs already in both camps look on the bright side.

Jeff Moore, vice president of business development for Sterling Computers, a Sun and Oracle partner also in Omaha, is one. "At first blush, this could be a tremendous win for Sterling and our customers too," he said. "[Oracle CEO] Larry Ellison made the comment in his release that a customer now has a one-stop shop from the app down to the wire… . That's a huge win … the R&D horsepower between the two is very powerful."

Does an Oracle buyout make more sense than an IBM deal? "I don't know. … It's probably a better marriage, and if I was HP or Dell or someone, I'd be concerned," Moore added.

Others see Oracle, with its serial multi-billion-dollar acquisitions -- of Sun, BEA Systems, Hyperion, PeopleSoft/J.D. Edwards and of Siebel Systems -- as the new Computer Associates, aka CA. This is not a compliment.

These naysayers say Oracle is snapping up extremely profitable maintenance and support revenue streams more than innovative technology. Although even these skeptics acknowledge that in BEA Oracle got the world's best application server and in PeopleSoft it got the market-leading position in human resources management software.

But it is the support and maintenance revenue that is most profitable.

With Sun Solaris, Oracle, which fields its own Linux distribution, gets even more entrenched in the operating system world, pitting it even more squarely against Microsoft.

Opening another front vs. Microsoft, IBM contributor Heather Clancy definitely sees the buy as a countermove to Microsoft. "Oracle had the enterprise apps; now it has the OS. Microsoft had the OS and now has the enterprise apps," said Clancy, vice president of strategic communications at S.W.O.T. Technology Solutions.

And, as Oracle fills in the gaps in its own stack, it will inevitably spark conflict with new constituencies.

"One of Sun's strongest suits was its application development community," Clancy said. "Now, if I'm a third-party ISV and compete with Oracle, why would I develop for Solaris? I might be better off developing for Windows 7 or even one of the IBM platforms."

Dan Mori, vice president at FusionStorm, a big San Francisco-based Oracle and Sun partner, said Sun's hardware component will allow Oracle to combat IBM on its own terms. IBM moves a lot of its DB2 database bundled with its servers, something Oracle could not do until now, Mori said. "I think they'll do a lot more appliance-type deals."

On the conference call outlining the purchase and preliminary plans, Oracle co-president Charles Phillips brought up the possibility of Oracle launching vertical-industry-specific appliances going forward.

Oracle is not known for its willingness to support non-Oracle parts of a customer's technology stack. It has tried to force customers to use its own Linux, its own Oracle VM virtualization by refusing to support non-Oracle software in their configurations.

The timing of this news, coming a day before VMware's big vSphere announcement, was probably an added perk for Ellison, who delights in tweaking competitors.

Sun gives Oracle access to Sun's xVM products.

This story was updated Monday night with additional partner comments

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