Oracle Joins the Hardware Big Leagues with Sun Buyout - Page 2

However, the Oracle buyout gives the Sun brand at least a chance for a new lease on life under the Oracle umbrella. If Oracle is smart, it will retain the Sun brand and market identity while continuing to invest in server and storage research and development.

Sun still has many loyal customers. Oracle has been one of the most loyal. The two companies grew up together in Silicon Valley, and Oracle has run his own IT centers mostly on Sun equipment. It hardly makes sense that Oracle bought Sun so it could slap an Oracle logo on Sun's boxes. But stranger things have happened.

This isn't Oracle's first foray into the hardware business. There are some who may yet recall that Oracle was one of the chief proponents of the "network computer," a stripped-down computer without its own data storage disk drive that would connect to centralized servers and databases to access applications and data. Oracle actually trademarked the term "network computer division" and in the mid-1990s promoted an alliance of manufacturers, including Sun, to build and sell the devices.

Now Oracle is in the hardware business with both feet for better or worse. It gets a chance to show whether or not it can build an integrated hardware and software business on the scale of an HP or an IBM.

That has to be an important factor to Ellison, who will turn 65 in August, an age when most corporate chief executives head off to retirement, though not necessarily so in his case. But he has to be thinking about his legacy. And the massive buying binge the company has engaged in for the past six years was intended to give Oracle the power and resources to stay vigorous perhaps for decades to come-long after he has left the company he founded.

The challenge for Oracle will be to keep Sun from becoming a drain on his own cash reserves. Oracle must wring out all the redundancies and expenses from Sun operations. Oracle has shown time and again that it can do just that with ruthless efficiency. But it also much restore the competitive edge of Sun products, something that was lost with Sun's stubborn refusal to use Intel x86 processors in its servers and its adherence to the SPARC processor platform long after it had ceased to be a market advantage for the company.

But most of all, Oracle has to prove to all those other loyal Sun customers that there is an upgrade path for all the Sun hardware and software they have invested in over the years.

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...