Oracle To Acquire Sun Microsystems For $7.4 Billion

It's sad to see an independent company like Sun Microsystems being acquired but Oracle is probably a better acquirer than IBM and this acquisition has a high probability of success.

First, there is no hardware overlap. The OS and hardware from Sun will create a lot of synergies for Oracle as they will be able to offer completely integrated (hardware and software) solutions to their customers. The goal here is to reduce the costs of integration. I'm still amazed that IT teams have to spend money (directly or through integrators) to install and configure operating systems, middleware and enterprise software packages. I've heard that Oracle is only acquiring Sun for Java. I don't think it's the case. IBM and HP are Oracle's competitors and Oracle needs hardware to fight them in the marketplace.

Second, these are two bay area companies with similar cultures, much easier to integrate. They have been partners for over 20 years. They have developed joint call centers, and engineers and marketers on each side are very familiar with the other company's portfolio. It's probably not a good example to bring back to the table but Sun and Oracle were viewed as two of the four horsemen of the new economy back in 2000.

There is a risk that software vendors who competing against Oracle in the enterprise software area, stop supporting the Sun HW platform. Interesting challenge for the market development teams!

Evolution of the Data Center

As I am looking at the triangle to explain the transformations happening around content, networks, and devices I can't help thinking about the other changes happening in the IT industry. Is one driving or enabling the other?

In the past, I talked about utility or cloud computing and it seems that cloud computing is becoming the new buzz word. It is true that content providers, service providers and network infrastructure manufacturers believe in the same shared network service architecture. Cloud computing meets all the scalability, reliability, flexibility and performance (one could argue with this last one :-) required to deliver these services over the web.

Big players like Sun, Microsoft, IBM, HP, Oracle and Amazon are already offering cloud computing services to other companies to run their software. Like email and web hosting in the past, this is not for everyone. Large companies still see their data centers as a competitive weapon and won't let anyone running it outside their four walls. They are using the same convergent infrastructure (server, storage, software) to make their own data centers much more flexible but it will be a while before they transition. This explains the success of VMware ($700M of revenue can't lie).

In the meantime, more cash-sensitive companies will buy computing resources on the web to run some of their software (or buy the service outright from salesforce.com). The data center is evolving to better server the business model outlined in the triangle.