September 2009

Q. Oracle’s acquisition of Sun is quite possibly the most strategically brilliant information technology (IT) move in more than 20 years. What will Oracle do with Sun’s open source offerings?

A. Back in the mid 1980's, I worked for Oracle Corporation. Although much has changed over the years in this billion-dollar conglomerate, at least one thing remains the same: CEO and founder Larry Ellison is strategically brilliant.

Back in the 1980's, Ellison made sure that all of Oracle's products were functionally identical on all operating system platforms including Windows, Vax VMS and Unix. In order to penetrate larger accounts, he offered the personal computer (PC) version of Oracle's database and all of its tools for $299. This one low price removed the barriers to entry for smaller organizations and allowed IT groups in larger organizations to build fully functional online transaction processing (OLTP) applications on the Oracle database platform. Soon companies wanted to deploy these prototypes and proof of concept applications, rolling them out to larger VMS and Unix production environments, and paying hundreds of thousands of dollars for the same functionality so that they could run them on these larger platforms.

This brilliant marketing move significantly grew Oracle's database market share and allowed Oracle to double their revenue for 13 straight quarters between 1987 and 1990, growing this once basement startup into one of the largest software companies in the world.

A lot has happened between 1985 and 2009: a couple of recessions, a dot com bust, many key acquisitions, and Oracle is left standing as one of the largest software players in the world.

Larry Ellison is close to pulling off the biggest coup in the last 20 years by acquiring Sun for a bargain basement price of approximately 5.6 billion dollars. This move is positioning Oracle as:

  • the premiere open source database player with MySQL

  • the owner of the Java development language

  • a key operating system player with Solaris

  • one of the premiere high-end hardware providers in the world

  • a key Microsoft competitor

  • a key IBM competitor with a full range of applications, services, and hardware

  • a one-stop shop for all your application, database, hardware and development needs

Those companies that wrote off Oracle in the past have suddenly woken up to find themselves in bed with Oracle with their MySQL, Java, Open Office, Solaris and Sun installations.

For some, it’s a dream come true: they finally get a large successful conglomerate to back their favourite open source software and to support their open standards. For others, who have been burned in the past by Oracle’s somewhat greedy and forever changing pricing policies, it’s quite the nightmare. But perhaps Oracle has learned from their past mistakes and will approach the Sun product line with a slightly less capitalistic view, in the hopes of restoring their reputation and to win over the loyal Sun customer-base and the open source community.

In any event, with Sun’s acquisition, Oracle is now positioned to fully integrate and configure their applications, databases, operating system and hardware offerings. There is opportunity to provide customers with hassle-free, pre-configured appliances.

Many questions remain to be answered, such as:

  • will Oracle invest in and promote MySQL as the open source database of choice?

  • will Oracle invest in and promote Open Office as the Microsoft Office alternative?

  • will Oracle expand their consulting division and take on IBM head to head?

  • will they appeal to the free software community?

  • what will they do with Sun hardware?

  • what will they do with Java?

If history has taught us anything, it's that Larry Ellison will make the most of this acquisition and will take on the likes of IBM, Microsoft and SAP. He will once again live up to his motto "It is not sufficient that we succeed, everyone else must fail!"


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