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Oracle: "We're in it for the hardware too (now)" PDF Print E-mail
Friday, 01 May 2009 00:00

Most observers believed that Oracle’s main goal in buying Sun was to secure Java, MySQL, and other Sun software assets. However, Larry Ellison’s recent pronouncement that Oracle is “in the hardware business to stay” has rocked the industry. Ellison clearly indicated that Oracle will be looking to optimize Sun hardware (including SPARC, CMT, and x64 platforms) to better run Oracle products. The implications of this are profound. Oracle would be competing head-to-head with their system vendor partners Dell, HP, and IBM.

At this point, all we know is what Ellison said. We don’t know if they truly intend to keep all of Sun’s products or how long it will take Oracle and Sun engineers to come up with a new integrated server offering. Right now, I’m pretty sure that not even Oracle knows the answers to those questions. However, they will certainly be coming out with something, whether it’s a roadmap, a promise for new hardware, or actual new boxes. My industry contacts are almost universal in their belief that Oracle doesn’t really want anything to do with Sun hardware, and that the bad economy has thwarted their intentions to sell off Sun’s gear and associated businesses. There is certainly some support for this position, given that Oracle and HP were rumoured to be looking to tag-team Sun, with Oracle taking some SW and HP grabbing the gear. That deal, assumedly, fell apart and won’t be resurrected anytime soon.

Industry folks, particularly other server vendors, typically say that they don’t see Oracle sticking with Sun’s hardware; or, if they do, they see Oracle being successful enough to warrant the investment. I’m not so sure. I think there is a case to be made for what Oracle is talking about with integrated HW/SW bundles – as long as the integration provides some compelling value to customers. If it’s just pre-installation and testing, that won’t cut it. As a test for this concept, I’ve asked the naysayers this question:  “Let’s say that your company were to purchase SAP tomorrow. Is there anything your folks can do that would give your systems an advantage in an SAP deal vs. your competitors?” There’s usually a pause while they consider the alternatives... and then either grudging acknowledgment of the merits of this approach or a sudden changing of the subject.

I’ve had a few contacts bring up issues surrounding optimizing systems for workloads – which is a valid point. They assert that if you optimize a server and o/s for a specific application, then you de-optimize it for other apps. This makes intuitive sense and is probably true – but it all depends on exactly how the systems are optimized and whether those changes are permanent or can be changed. We won’t know any of this until the deal is done and new systems start to roll out – which could be a ways down the road.

One of the main reasons I think Oracle is going to keep the Sun HW and work towards their stated integration vision is because I think that Larry understands the IT food chain as well as – or better than – anyone in the industry. In the IT pecking order, customers will change hardware platforms before changing their operating system of choice (this is why HP customers are mostly migrating with HP-UX to Itanium-based systems). These same customers will change operating systems before changing their database (which is why Unix system vendors who moved from Tier 1 to Tier 2 ports of Oracle suddenly found their server sales drying up). The most difficult change of all... and the one that customers will avoid at all cost...  is changing their applications from one set to another (this includes the database layer). It’s not that it can’t be done technically – it can. Databases can be moved from Oracle to DB2 or back in a few days with little or no risk. The really difficult and risky part of the process is making sure that all of the embedded business logic and customization in the business applications works exactly the same in the new product as it did in the old one. This requires a lot of labor-intensive coding and testing, and can be very costly. Customers are loath to take this step and will generally only do it when they’re getting much more functionality or ROI out of the deal.

Given the food chain, and Oracle’s market share in database and applications, it’s reasonable to assume that if they (Oracle) execute on their integration strategy, they might win a decent share of Oracle-related server sales. In the Unix market, deals with at least some Oracle content are a considerable proportion – maybe 60-70% of overall deal count. Oracle has quite a large presence in the enterprise x86 market as well. If confronted with a Oracle/Sun offering, there isn’t much that HP, IBM, or Dell can do other than push the unique attributes of their box, drop their prices, or sweeten their deals in other ways. In most of these deals, the Oracle software component will be a given – so trying to sell a bundle with a different database is a nonstarter for those other vendors.  There are ways to counter this Oracle strategy, however, mostly by moving the conversation to a discussion of a virtualized infrastructure and looking at the other apps that can be put on the new system, with the point being that a highly optimized Oracle/Sun system won’t be as good at running other apps. To put it in sporting terms, it’s like a basketball player who can only shoot 3-pointers. Sure, he’s a good guy to have when you’re down by 2 with only a few seconds on the clock, but he can be a liability the rest of the game since he’s not a great all-around player. With virtualization, we’re moving away from specialized boxes and into an era where every box needs to be able to adequately run a wide variety of workloads. We’re looking for the good, all-around server athletes, because that ability to run, shoot, and defend contributes the most to the team overall.


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