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 them loose.
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 limited:
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.