As the Oracle-Sun Microsystems deal wends its way toward completion, tension has ratcheted up among Sun partners and customers who worry that the $7.4 billion acquisition, announced in April, will mean big changes for their businesses.
Top of mind is confusion about what Oracle Corp., a software powerhouse, plans to do with Sun's flagship SPARC hardware business. Partners that have built products around Sun's SPARC servers and Solaris operating system are understandably concerned that their franchises are on shaky ground.
Jeff Wilke, CEO of Omaha-based Data Media Solutions Inc., said thanks to Oracle, Sun hardware will be a goner.
"Oracle bought itself a software company and Java," Wilke said. "They can put the squeeze on IBM by charging for MySQL and Java, but then they'd alienate small people like us who use that stuff. Or maybe they just charge the big guys. In any case, I don't think Oracle keeps the hardware pieces it will have left after IBM and HP get done cannibalizing Sun accounts."
Oracle-Sun silence is deafening
The silence emanating from Oracle and Sun has only heightened this concern, but the companies' public statements were limited while the U.S. Department of Justice and European Commission regulators consider the acquisition. The DOJ signed off on the deal today but European regulatory approval is still pending. When that is resolved, Oracle can start talking freely about its plans and that leaves time for more worry.
"My problem with the Sun-Oracle deal is that I've heard nothing, and I mean nothing, since the announcement," said Paul Sutton, CEO of Kabira Technologies,Inc. , a maker of real-time transaction systems that run atop Sun hardware and Solaris.
Kabira and other ISVs need advanced, detailed information about their partners' future hardware and software plans. Clearly, that hasn't been forthcoming from Oracle and Sun. And other Sun partners are worried about Oracle's not-so-channel friendly reputation.
"Historically, Oracle doesn't treat its partners well, and that concerns me," said one Sun partner in New England.
IBM, HP capitalize on Oracle-Sun deal's uncertainty
Meanwhile, Sun competitors IBM and Hewlett-Packard Co., have been making hay, playing up these uncertainties for their own gain.
A New England-based solutions provider said HP and, to a lesser extent, IBM have been courting select Sun partners.
"I think IBM is being more selective," this partner said. "They don't necessarily want more box pushers … and HP is traditionally a more direct competitor to Sun than IBM, at least in my experience."
Some large Sun accounts served by VARs and integrators are also on tenterhooks. An IT executive at a large New York financial institution said his company has been moving off Sun hardware onto IBM equivalents for the past two to three years, even before an Oracle deal was rumored, because of concern over Sun's future.
The CIO of a large Chicago-based finance firm also said there has been more migration off of Sun's machines in the past year as contracts have expired.
"Sun's pullback of field sales and support in the last year was probably as big a factor as the Oracle deal," he said.
Sun's VARs and ISVs "certainly are nervous now," he added.
Some Oracle-Sun future optimism
Still, not all VARs share that sentiment.
Mick Gallagher, CEO of LST, a Fallbrook, Calif.-based Oracle partner, said fears of Oracle selling off Sun's hardware business to Hitachi, Fujitsu or another player are "way overblown."
Gallagher said Oracle will probably follow through on the "vertical appliance" plan that Oracle president Charles Phillips mentioned briefly on a conference call announcing the acquisition bid earlier this year. At that time, Oracle CEO Larry Ellison said the combination of Sun and Oracle would offer customers a one-stop shop from "the app down to the wire."
"Vertical appliances could be a good thing," Gallagher said. "I can see [Oracle] doing a retail appliance. And if you look at the other areas where they're heavy --telco, chip manufacturing, energy--I could see an appliance play there."
If Oracle goes that route, there is "zero chance" it will sell off Sun's hardware business, Gallagher said.