Oracle buying Sun is great for Oracle, bad for IBM

Oracle buying Sun is great for Oracle, bad for IBM
by: Jerry Liao

On 20 April 2009, the I.T. industry was taken by surprised when Sun Microsystems and Oracle announced that they have entered into an agreement under which Oracle will acquire Sun in a deal valued at approximately US$7.4 billion, or $9.50 per share.

This came as a surprised to many because IBM was in talks to buy Sun for US$7 billion but the negotiation reportedly failed. Sun approached IBM again but IBM played hardball and said they are no longer interested to acquire Sun, at any price. After that, Oracle came into the picture and snatch Sun from IBM.

So what is the effect of this development to Sun, Oracle, IBM and to the consumers?

First, no matter what IBM said, I believed IBM made a very mistake in letting go of Sun. IBM is the biggest loser here. IBM handed Oracle the tools and arsenals to compete with them. In other words, IBM created a stronger competitor in Oracle. Whether they need Sun or not, IBM should have bought Sun at all cost.

The biggest winner here is Sun Microsystems. They could have gotten a bigger amount had they decided to sell Sun a year or two years ago, but a US$7.4 billion offer is not too bad either considering it came when the economy is in its worst state.

For Oracle, they got Sun at a bargain price. With the acquisition, Oracle now owns Solaris, Sun servers, Java, Staroffice/OpenOffice, MySQL, Glassfish and other technologies. With Sun, Oracle is now a stronger company in the enterprise, cloud computing space, open source, mobile computing and the consumer market.

Microsoft should also start to get really worried because Oracle can take on Microsoft head-on, pitting Solaris vs Windows, Openoffice vs Microsoft Office, Java vs .Net, MySQL vs MS SQL, Fusion vs Sharepoint to name a few.

On the part of the consumers, they will now have more options available in multiple technology areas like OS, DBMS, middleware, servers, storage and applications.

“Oracle will be the only company that can engineer an integrated system – applications to disk – where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up.” said Oracle CEO Larry Ellison.

“Oracle and Sun have been industry pioneers and close partners for more than 20 years,” said Sun Chairman Scott McNealy. “This combination is a natural evolution of our relationship and will be an industry-defining event.”

The challenge for Oracle now is to make all its acquisition work together. Oracle made a lot of acquisitions over the years. Knowing which technology will complement what technology will be a great challenge. Like how the Sun acquisition would fit in to Oracle’s FUSION project.

With the acquisition, the battlefield is now down to IBM, Microsoft and Oracle. Who will emerge the winner is still a big question mark.


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