Rationality has prevailed: the European Union has finally approved of Oracle’s $7.4bn acquisition of Sun Microsystems. The primary roadblock was concern over the long-term future of MySQL which, I guess, means that having a free relational database is somehow a human right (at least in the EU). However, it seems that Oracle’s ’10-Point Commitment’ has assuaged fears that MySQL and its community will be subsumed or squashed.

Oracle’s plans for Java and the Java Community Process (JCP) have also been a hot topic of speculation, but the general consensus now is that no major changes are in the works. Sure, Oracle could change the rules so that only Oracle software is Java-compliant, use their veto power to their own competitive advantage, etc… but we just don’t see it. It’s too self-defeating. There’s every reason to think that they’ll manage Java and the JCP at least as well as Sun did.

Oracle will be hosting a 5-hour (!) webcast on Wednesday, January 27 that promises to clear up a lot of the details about their plans going forward. We’ll be watching and maybe even providing some running commentary along the way.

What does the finalization of this deal mean to the industry?

We think that Oracle/Sun could be very disruptive to the plans of other enterprise IT vendors, particularly in the Unix market. Sun still has a very large installed base of Solaris and Sparc, and a sizeable faction of loyal customers who want to “believe” in the Sun story. Oracle is already a part of many installed bases –  and again, like Sun, is a major force in the Unix market.

Oracle has a greater hold over customers with their software than IBM, HP, Dell, or any other vendor has with their hardware alone. Customers would rather switch hardware platforms (from IBM to HP, or HP to Sun, or Dell to IBM, etc.) than go through the time/effort/risk of changing the software that runs their business. This means that in a hardware deal where the incumbent software is Oracle, the other hardware vendors (IBM, HP, Dell, etc.) could very well be at a disadvantage if Oracle can put forward a compelling bundle of Oracle SW and Sun gear.

Of course, there are competitive databases and corporate applications out there, but getting a customer to switch from, say, Oracle to DB2 or SQL Server on the database side is fairly rare. Customers moving from corporate apps like SAP to, say, Oracle Applications are even more rare. Once these decisions are made, they tend to be in stone. It’s not that moving from one database or single application to another is all that difficult from a technical perspective; it isn’t. The data can be moved fairly easily. The real problem is all of the business logic and “stuff” that surrounds the database. It all has to be translated, tested, verified, and then (fingers crossed) used. It’s a big undertaking for most data centers, and a step that isn’t taken lightly.

On the other hand, changing hardware platforms isn’t nearly as daunting. Moving from Sun’s Solaris Unix operating system to IBM’s AIX or HP’s HP-UX isn’t all that bad – and vice versa. The applications are exactly the same, and the underlying operating systems aren’t all that different from a technical standpoint. Where there are differences, they are well-known and documented.

This is why Oracle + Sun could be disruptive – certainly more disruptive than, for example, Cisco entering the server market. Oracle’s strategy of tightly integrating their SW with Sun HW is a valid move. Given Oracle’s recent and successful efforts to buy up other enterprise players, there is an Oracle component in a large portion of system deals – particularly in Unix. This gives them an entrée into a lot of deals and, if they play their cards right, a chance to put their integrated offerings on the table. There are some challenges, but they have a shot at succeeding. Oracle has a lot of leverage in the data center, and that gives them a chance to get some incremental revenue through bundling hardware and services into their deals.

Does this merger put Oracle/Sun in the class of IBM, HP, and other end-to-end solution providers? No. Oracle does not instantly become a complete substitute for IBM or HP in all things. The differentiator is business services and, to a lesser extent, a large IT architectural and professional services organization. The combined Sun and Oracle service organizations simply don’t have the heft of IBM Global Services or HP + EDS.

But… Oracle doesn’t have to be a massive services player to be successful – they can pick their own sweet spots. What Oracle does have in its favor is much deeper vertical industry knowledge than many in the industry recognize. They have vertical market experts who fully understand their customers’ technology, workflows, challenges, business models, etc., and they have industry-specific versions of Oracle software to address those needs. This is what separates an Oracle + Sun from, for instance, a Dell; it also gives them the ability to sit at the same table as HP and IBM. What we might see down the road is the purchase of a mid-sized business consulting house that gives Oracle more services depth –  the sort of influx of business-side skill that the PricewaterhouseCoopers purchase gave IBM Global Services.

For a highly detailed and comprehensive take on the specifics of what Oracle might do with various Sun products, see this article by Timothy Prickett Morgan.