Oracle acquisition of Sun makes strategic sense

News Analysis

Oracle acquisition of Sun makes strategic sense

Bill Goodwin

Oracle's surprise acquisition of Sun for $7.4bn makes strategic sense for both suppliers, but its implications for CIOs are only slowly becoming clear.

Oracle snapped up Sun just two weeks after negotiations between Sun and IBM collapsed.

The deal will catapult Oracle into the top league of IT suppliers, allowing it to compete directly with rivals HP, IBM and Microsoft.

It gives Oracle control of two strategic technologies - Sun's Java programming language and the Solaris operating system, which underpin much of Oracle's work.

"Oracle will be the only company that can engineer an integrated system - applications to disc - where all the pieces fit and work together so customers do not have to do it themselves," said Oracle CEO Larry Ellison after the deal.

The sale makes sense for Sun, which has been struggling financially since the dotcom crash. Its strategy of using software to boost its hardware sales has foundered as servers increasingly become a commodity item.

But many questions remain unanswered for users. How long will Oracle support and develop Solaris? How will Oracle work with the open source community to develop Sun's low-cost MySQL database? What is Oracle's strategy for Sun's StorageTek business? Will Oracle continue to support Sun's cutting-edge research?

The biggest question, however, is Oracle's move into hardware manufacturing. Oracle could, like IBM, package up Sun's hardware with Oracle software, to create all-in-one packages for businesses. More likely, say analysts, it will sell off the hardware business .

"I still believe that despite Larry Ellison's protestations, it will sell the hardware business," says Richard Holway, analyst and CEO of TechMarketView.

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