Sun rivals evaluate Oracle's $7bn acquisition

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Sun rivals evaluate Oracle's $7bn acquisition

Paul Kunert

The medium-term future of Sun will look much safer if Oracle's proposed $7.4bn acquisition goes through. But while it may provide assurances for end-user customers, it could present channel and technology partners with food for thought.

The industry took a deep intake of breath earlier today as it emerged that Oracle had replaced IBM as the likely buyer of troubled Sun, with both describing the situation as a momentous day for the industry.

There had been question marks hanging over Sun's future, as the company had consistently made quarterly losses and struggled to fully regain the market position that it enjoyed during the dot.com boom.

The deal with Oracle will ensure the survival of Sun for the medium term, said Peter Spreadbury, director enterprise partners at corporate integrator-come-reseller SCC. But he added that it could disrupt technology partnerships Oracle holds with HP and IBM.

"The challenge is how will HP and IBM digest the development? They are big partners to Oracle and now Oracle is acquiring one of their biggest competitors," he said.

Official figures are not available but according to estimates, 20% to 30% of Oracle database software ships on Sun hardware.

"Oracle could upset the other 70% of the market by buying a competitor to them," said Greg Carlow, managing director at Repton.

But Alastair Kitching, COO at Esteem Systems, believed this would not be a concern in the polygamous IT industry. There are already a number of complex relationships in place with vendors competing and co-operating in different market sectors.

"The deal is good news for Sun and its customers but I am not sure what it means for the channel because I don't think Oracle has as good a reputation for channel management as Sun, so from that perspective the verdict is out," he added.

The initial view from Mike Phillips, chief executive at Morse was that Oracle's acquisition of Sun should prove less destabilising than if IBM's bid had been successful.

"A deal with IBM would have led to a re-organisation, so some of our relationships would have been less strong but we do not anticipate as many duplications with Oracle," he said.

IDC European server research programme director, Nathaniel Martinez, thought there were "synergies" between the two organisations in the datacentre, but a question mark hangs over Sun's open source software business.

"I don't see Larry Ellison (Oracle CEO) being too happy about that technology because it is free which won't help Oracle's database margins," he said, adding Sun has "best of breed" software but has failed to commercialise it.


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