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.