IBM may be the biggest loser in the Oracle/Sun deal

The wheels were set in motion for Oracle acquiring Sun back on Oct. 10th of 2008, when Larry Ellison surprised many by launching the company’s first ever hardware product, the Exadata Storage Server.

The server built by HP is not yet available to the channel.

Yesterday’s historic deal between two silicon-valley pioneers will more than likely open that area of business to the channel.

Approximatelyhalf of Oracle’s North American revenue is through the channel rightnow, by adding a valuable element such as Java will only increase thatbusiness dramatically.

Forexample, Oracle’s Fusion Middleware is the fastest growing businesssegment of the company. This middleware is built on top of Sun’s Javalanguage and software.

Backin October, Oracle created a team whose goal is to leverage productssuch as Fusion middleware and match them up with channel partners whoare strong in certain industry verticals.

Timewill tell if the channel will see an increase in hardware businessbecause of this acquisition, but you have to think that it will.

Anotherselling point for Oracle is that it can now offer the channel orcustomer’s directly a fully integrated system. As Ellison said duringthe conference call yesterday morning “all the pieces fit and worktogether so customers do not have to do it themselves.”

This integration is something that IBM mastered once Lou Gerstner tookover in the mid-nineties. Hardware, software and channel integrationreduces costs in the long term for a customer, while producing returnsfor channel partners from the get go.

Thebiggest loser in this deal maybe IBM. I would like to point out that Istill believe Sun could have continued operating successfully andturned their business around. So in my opinion Sun is truly the biggestloser. However, Oracle, with Sun, has positioned itself and is reallyin IBM’s den now.

Roberta Fox, market analyst for the Fox Group, said IBM, by not acquiring Sun Microsystems, put itself in risky position marketshare wise over Oracle.

Byacquiring Sun, IBM would have been the dominant supplier of high-endUnix servers and attained Java along with other valuable software.

Now, Oracle has all those valuable products.

Oracle continues to expand its software empire with PeopleSoft (JD Edwards), Seibel, Hyperion, BEA and now Sun.

IBMcould have prevented this. The difference between offers was only about$100 million and it would have passed regulatory approval more thanlikely.

Sun maybe the one that got away from IBM. We shall see if they live to regret the missed opportunity.


One quick hit before I go. OKI Data Americas, Inc. has named Takabumi Asahi its new Executive Vice President and Chief Operating Officer for North America.  Mr. Asahi will report to President and CEO, Stewart Krentzman.

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