NEWS ANALYSIS: Oracle's $7.4 billion Sun acquisition is mostly good news for Microsoft. An IBM-Sun match-up would have raised the pressure in enterprise software and bolstered fledgling open-source projects. Oracle has no need for MySQL, OpenOffice or OpenSolaris. Where Microsoft must worry is Java and Solaris and how Oracle can offer end-to-end hardware-software solutions.
What's that sappy smile coming from Microsoft CEO
Steve Ballmer? It's a great day to be alive. Oracle
is buying Sun-and not
The Oracle-Sun merger poses more
competitive risks to Cisco and IBM, particularly as Oracle
expands its customer base in verticals such as government and
telecommunications. Oracle will gain more enterprise breadth from the Sun deal,
but like PeopleSoft and Siebel, not necessarily depth against Microsoft. Sun
provided lots of energy to open-source projects, whose light Oracle almost
certainly will darken-whether by extinguishing MySQL, OpenOffice and
OpenSolaris, or cutting
Oracle has been quite aggressive with acquisitions, averaging about one a
month, and quickly integrating them into its operations. Surely Oracle
will apply past lessons to Sun. IBM
would have done better for Microsoft, at least early on. Big Blue is clumsier
and slower with acquisitions than Oracle. IBM
would have taken much longer to integrate Sun technologies into its portfolio.
That said, IBM would have more craftily used
open-source projects competitively against Microsoft; they're junk to Oracle.
Still, Oracle won't quickly integrate Sun. The acquisition is bigger and
more complex than, say, PeopleSoft or Siebel. What happens during the
transition to existing Sun partners and customers? For example, Adobe isn't a
Microsoft .NET shop, instead favoring Java
technologies. Will Oracle lose some of the partners/customers or fortify
relationships with them. An unholy alliance between Adobe and Oracle would be
much more a problem for Microsoft than the Sun acquisition.
Oracle is little more dangerous to Microsoft with Sun than without it,
although there are areas of potential expansion that should concern Microsoft CEO
Steve Ballmer and his top executives. Conceptually, Oracle would seem like a
fiercer Microsoft competitor, by gaining Windows competitor Solaris, Office
competitor StarOffice and development language competitor Java. What looks good
in concept may not be in reality. But aside from Java, competitive value is
StarOffice: Even if Oracle deeply
integrated the software with its CRM and
database applications and gave it away for free, Office would remain hugely
dominant. Microsoft's server stack is simply too high and Office is too
entrenched a product for many enterprises to absorb the switching costs, which
the global recession exacerbates.
Solaris: Businesses aren't moving to Unix;
they're moving away from it. Windows Server has posted about five years of
double-digit growth and tremendous installation share gains against Unix.
Oracle's best strategy isn't expansion but containment-better optimizing its
server software for Solaris. Tighter integration will keep customers, but not
necessarily convert new ones to Solaris.
Java: The technology also is more about
containment than expansion. Microsoft already has successfully marginalized
Java. But a religious war or Blue State
versus Red State
demarcation could be a heap of trouble for Microsoft. In that scenario, Oracle
would rally all its products and developers solely to Java. Other commercial
vendors, like Adobe, would choose a side. Oracle's
stewardship is probably good for Java, Oracle and its customers. It's only
really bad for Microsoft if two warring development camps emerge.
What Oracle gains that Microsoft doesn't have is more interesting: an end-to-end
hardware-software stack spanning the PC to the server and storage array.
Suddenly, Sun is more like IBM and less like
Microsoft. Oracle can bundle software, hardware and services, which Microsoft
can't do. Oracle can pursue enterprise business that Microsoft couldn't, but
quite likely wouldn't; it would be bad business.