Oracle CEO Larry Ellison says that once his company acquires Sun, he will stay out of the high-volume, low-margin server space currently dominated by HP and Dell. Instead, Oracle will focus Sun's SPARC/Solaris and Intel-based systems aimed at the high end. At the same time, those systems will be a foundation of Oracle's converged data center strategy, which will tightly integrate servers, storage and networking using software from Oracle and Sun. Other vendors, including Cisco, HP, Dell and IBM, also offer converged data center solutions.
Once it gets Sun Microsystems under its wing, Oracle will not
compete in the high-volume, low-margin server market, ceding that space
to Hewlett-Packard and Dell, according to Oracle CEO Larry Ellison.
Instead, the software giant will focus Sun's SPARC/Solaris and
Intel-based systems on the high-end server market and as the basis for
Oracle's converged data center strategy, Ellison said during Oracle's
conference call Dec. 17 announcing the company's second-quarter
financial earnings.
"Sun really does not now or ever will have the volumes to compete in
the high-volume, low-margin business of just selling an Intel server
with Windows on it or Linux on it one at a time," Ellison said. "The
high-volume, low-margin is a good business as long as you have high
volumes. This is something that Dell and HP are very good at."
He said Oracle will instead opt to market Sun's servers in the
"high-value, high-performance" space, with SMP systems like Sun's SPARC
Enterprise Server M9000, a mainframe-class system that can scale up to
64 processors and 256 cores.
The high-end servers also will be a foundation for Oracle's
converged data center strategy, which also will include storage,
networking and Oracle virtualization technologies, all tied together by
Oracle and Sun software, Ellison said.
He said that such solutions essentially are what are called private
clouds, and that future enterprise data centers will be more about
tightly integrated solutions than building environments piecemeal.
"Our overall strategy going forward ... is not to sell individual,
industry-standard components, but group them together in products like
Exadata."
Oracle's Exadata Database Machine,
which is a combination of Sun hardware and Oracle database software,
which was introduced earlier this year and among the first steps in
tying Oracle and Sun technologies together.
During the same conference call, Oracle President Charles Phillips
said demand for the Exadata is ramping quickly, and that Oracle is busy
trying to keep up with orders, including those from some customers
looking for more than one system.
"Exadata is on fire," Phillips said. "It's a red-hot product."
It's important for Ellison to continue to talk about Oracle's plans
for Sun's hardware business. Rivals like Hewlett-Packard and IBM are
using the uncertainty caused by Oracle's planned $7.4 billion
acquisition of Sun-and the delays around the deal, as Oracle awaits the
go-ahead from the European Commission-to lure Sun customers away.
Officials with HP, who on Dec. 15 announced that they are partnering with
Microsoft, Novell and Red Hat in their Sun Complete Care program aimed
at enticing Sun customers, said that in the 12 months up to Oct. 31,
more than 350 Sun customers had made the move to HP.
Ellison said Oracle's decision to focus Sun hardware on the high-end
and in its unified data center initiative will be a key differentiator
for the hardware business going forward. It will be a high-margin
business for Oracle, and a high-value one for its customers, who will
not have to worry about integrating disparate components. Instead, they
will have everything already tightly integrated.
"We think that's what the computing business is going to look like for larger enterprises in the future," he said.
It also will bring Oracle into direct competition with the likes of
Cisco Systems, HP, Dell and IBM, all of which offer solutions in the
burgeoning market for unified data center solutions.
Ellison did not elaborate on the future of Sun's UltraSPARC
"Niagara" line of multithreaded processors, which are designed more for
high-demand systems such as Web servers, rather than for high-end
systems.
Despite antitrust concerns from European regulators around Oracle's
owning of MySQL should it buy Sun, Oracle officials during the call
were confident that the EC would approve the deal sometime in January.
They also said they expect Sun to add $1.5 billion in profits to Oracle
during the first full fiscal year after the deal is closed.
After two days of hearings before the European Commission Dec. 11 and 12, Oracle officials issued a list of 10 commitments they
said they will keep for five years regarding MySQL in an effort to
assuage concerns from the EC, competitors and users of the open-source
database technology.
Oracle President Safra Catz said that during the hearing, several
customers and Oracle user groups testified in favor of the deal. She
also noted that more than 60 Congressmen and the U.S. Department of
Justice also offered their support of the deal to the European
regulators.
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