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The Oracle-Sun Deal: What it Means for Microsoft

The dictionary defines an oracle as a prophet, or someone who can divine the future.  Is that an apt description of the Redwood City, California company we know so well?  If Oracle can predict the future, does its $7.5 billion deal to acquire Sun Microsystems relegate Microsoft industry dominance to the past?  Or is it just about a winning move in a game of one-upmanship with IBM?

Emerging common wisdom (and Oracle’s own press release) says this deal enables Oracle to provide the first real competition to IBM for big data center plays.  Likewise, it brings Oracle into the major leagues of Java influence players.  This would all suggest that Microsoft, and its partners, could have hit snooze on their alarm clocks this Monday morning and rested easy for a while longer.

But not so fast.  This deal puts Oracle’s push pins in a variety of places on the map where Microsoft has been making holes as well.

Let’s start with Oracle’s newly acquired ability to build turnkey appliances.  Since they now own server and OS products, in addition to the leading relational database, they have what they need to sell a massively scalable data warehouse in a box.  And if you think that’s not relevant, then please explain why Microsoft acquired DATAllegro to do exactly that, under SQL Server “Kilimanjaro”/project “Madison”.  But while Microsoft will have to partner with HP and Dell to get their appliances built, Oracle can use SPARC and Solaris to do that all by themselves.

In his very nice piece on the Oracle-Sun deal, my friend Tony Baer opines that the JavaFX RIA technology, which looked like it was going nowhere fast, may now have some real support behind it, as Oracle now owns it and they have had only tepid support for Flash.

So now Microsoft has new competition on the DATAllegro/Madison and Silverlight fronts.  But wait, there’s more…

Oracle buying Sun seems to consolidate the Java world into two main camps now: IBM and Oracle (don’t forget that Oracle had already acquired BEA and thus WebLogic).  Oracle now seems in a very consolidated position to wrest away IBM’s dominion of Java (Sun itself was rather weak there, ironically).  This could create more competition for .NET, and on a front where it felt the fight was settled.

Some people are saying that Solaris also gives Oracle what it needs to be a real player in the cloud.  Maybe; maybe not.  But if so, then Microsoft’s Azure has more to reckon with than it did before.  And not just on the platform level, but on the application side.  Microsoft has its own CRM.  Oracle has Siebel.  And PeopleSoft.  And J.D. Edwards.  And Oracle Financials.

As for MySQL, and the threat it continues to pose to SQL Server, the probable outcome is less clear.  Oracle could make MySQL die a slow death.  Or they could keep it alive in the role of rich benefactor, and use it as a foot in the door.  MySQL shops could arguably be more willing to listen to Oracle, especially about data warehousing and BI, where MySQL is rightly perceived as quite weak, than IBM or Microsoft, since Oracle now owns MySQL.

Have I made my case?  There’s a lot of competitive threat to Microsoft here.  Even if more still to IBM. 

But I see a “SilverLining” for Microsoft in this: a competitive threat from Oracle is much more constructive for Redmond than the competitive threat from PHP, a pre-Oracle-owned MySQL, Subversion, Eclipse and other Open Source offerings (and their adherents).  Why?  Because the Oracle threat is a competitive scenario where Microsoft is (a) more in its element, (b) better able to demonstrate value and (c) one where the winner actually makes money instead of just gaining market share for free or low-cost products.

Competition is scary but it’s good.  I hope Microsoft can use this deal to get its own game on and start racking up a bunch of victories. 



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# re: The Oracle-Sun Deal: What it Means for Microsoft

Good analysis Andrew,

I have added a link to this, together with other bloggers' thoughts, on my own Oracle / Sun article at: http://peterthomas.wordpress.com/2009/04/20/mergers-and-value/

Peter 4/21/2009 4:00 AM | Peter Thomas