Sun software is the tail wagging the dog
– Eric Auchard is a Reuters columnist. The opinions expressed are his own —
When Oracle agreed to buy Sun Microsystems for $7.4 billion in April, the headlines made much of the software maker’s decision to enter the computer business 30 years late. At less than 10 per cent of sales, Sun’s software business seemed an afterthought.
But Sun’s software is now center stage after European competition regulators said on Thursday that they would withhold approval for the deal until they finish probing the impact of the Oracle-Sun merger on the database software market. The decision means the transaction faces at least a four-month delay, pushing it into early next year.
Any delay is costly for Oracle. Sun’s sales have plunged as key financial, government and communications customers have held back purchases of computers and storage until Oracle is able to clarify its long-run commitment to Sun hardware and software products.
The commission is debating whether, or under what conditions, to allow Oracle to acquire Sun’s MySQL database software. Given that the business brings in only $100 million in quarterly revenue, less than 1/25th of Sun sales, the easy way out would be for Oracle to jettison MySQL. However, that would be a mistake.
MySQL is a free, or low-cost, database that powers the vast majority of the world’s hottest Web sites, blogs and open-source businesses, including Facebook, Google, YouTube and Wikipedia. At issue is the fact that Oracle is already the world’s biggest supplier of database software, the underpinning for many of the world’s biggest information storehouses.
MySQL is the alternative to Oracle and its main rivals, IBM and Microsoft, which between them generate most of the world’s database sales.
After Sun, expect new Oracle hardware deals
– Eric Auchard is a Reuters columnist. The opinions expressed are his own –
Larry Ellison, Oracle Corp’s chief executive, is famous for making outrageous predictions about the future of the computer industry and being mocked by rivals and pundits.
But don’t underestimate the software maker’s latest moves into the hardware business.
Oracle’s surprised many last month that the company would buy Sun Microsystems for $7.4 billion. Now Ellison has gone one better, telling Reuters he was “definitely not going to exit” Sun’s various hardware businesses.
The Oracle leader is not saying so directly yet, but the unmistakable conclusion to draw is that he is ready to embark on a new wave of mergers to consolidate the business computer market, once the Sun deal closes.
Hanging on to Sun’s computer, chip and storage businesses implies Oracle is ready to bulk up via mergers to reinforce Sun’s competitive position and check rival countermoves. Sun wouldn’t be selling itself if its franchise could survive alone.
Why would Oracle bother to pay $7.4 billion for a company known largely for its hardware, unless, that is, it has specific reasons to enter the hardware market? Oracle may be able to better exploit Sun’s Java software franchise. Java is used on more than 1 billion computers and phones, but Sun received only $200 million in revenue in 2008 for its 14-year-old software.
Larry is the Vince McMahon of the IT world for you wrestling fans. He makes things happen.
It always seemed odd that Google didn’t buy Java, and I suppose MySQL.