This is not exactly breaking news. Just last month at the combined company’s debut, Chairman Larry said he expected to revive Sun’s sagging fortunes, pulling the company back into the black even by the end of this month. At that event he said he expected to make about $1.5 billion in operating profit from Sun’s portfolio after owning the company for a full year and that he expected to take that number much higher over the next few years.
This sort of unbridled optimism gives one pause however. From early September, when the European Commission (EC) began its investigation of Oracle’s acquisition of Sun, until late December we heard a steady rant from Mr. Ellison about how that investigation was slowly strangling Sun’s chances for survival.
For instance, in late September speaking at a dinner sponsored by The Churchill Club, the chairman said the investigation was significantly contributing to Sun losing some $100 million a month. This statement came in the heels of Sun having reported a quarterly loss of $147 million.
In that talk the good chairman said the longer the EC’s approval process takes “the more money Sun is going to lose, and that’s not good for anybody. We want to get this (acquisition) done to save as many jobs as we can.”
Also contributing to Sun’s cloudy outlook around that time were multiple analyst reports surfacing indicating Sun was losing huge chunks of market share to archrivals IBM and HP in server hardware. A major contributor, of course, was the lingering uncertainty of Sun’s fate thanks to the EC’s investigation, which prompted Sun users to halt purchasing decisions or jump ship.
But with yesterday’s comments, all the angst Larry had over the EC’s four-month long investigation sun setting Sun’s future seems to have dissipated rather quickly. Now he is talking boldly about hiring a couple of thousand new employees to bolster Sun’s products instead of laying them off (although he did indicate there could be up to 1,000 employees let go), and exhibiting confidence about how the Oracle-Sun developed Exadata 2 super server, and the various stack computing strategies built around it, will soon outgun any offerings from IBM and HP.
So was Larry crying wolf to the EC about its investigation crippling Sun, or is his bold optimism about Sun’s chance simply masking the tough task he has ahead of him to make this deal succeed over the short term? It is hard to say, it may be a little of both. But given his claim he will make Sun profitable by the end of the month, it won’t take long to find out.
If you are concerned about Larry giving up his day job to spend more time plotting his defense of The America’s Cup, don’t be. The 65-year-old chairman says is not ready for retirement indicating he will continue to pursue software and sailing with an equal amount of vigor.
“I love Oracle and I love sailing, and I think I can do both,” he said.]]>
It’s finally done.
After nine long months of wending its way through all the necessary international government agencies, Oracle’s $7.4 billion bid to acquire Sun Microsystems has been approved and so officially declared not to be a health hazard to the IT industry. There are still China and Russia’s sanctions to gain, but no one is expecting any hand-to-hand combat there.
So now what? We’ll get some answers to that this Wednesday (January 27) when Oracle chairman Larry Ellison, President Charles Phillips and a platoon of Oracle and Sun executives outline some of the short and long-term plans for users, partners and the press.
I suspect there will be further details about leveraging the higher-end of Sun’s server hardware line as both standalone products and as part of hardware-software stacks, how the company plans to ensure the viability of the open source MySQL database, why it won’t lay off half of Sun’s 30,000 plus workforce, and a deep technical dive on a number of Sun technologies designed to enlighten Oracle users.
What will be interesting to me is what might be said, or not said, about some of the Sun products and technologies Oracle officials have not talked much about over the past nine months.
For instance, Sun has more than MySQL in its open source lineup. The company has a promising Web server, Glassfish Enterprise Server, which has been downloaded in some pretty impressive numbers that could be a nice compliment to Oracle’s Weblogic proprietary offerings. Sun also has the well known OpenOfice.org suite of desktop applications. That offering hasn’t put much of a dent in Microsoft’s office sales, but in the hands of Oracle it could become part of a client-server bundle that could make users think twice about renewing their software licenses with Redmond.
While Oracle doesn’t figure to mess too much with Java given its status as one of the most important programming standards in the market, I am interested to see in what direction the company might take it. Some have speculated Oracle will maintain the existing standard, but could also create a variant more specifically tailored for Oracle environments.
With Solaris in hand, Oracle is now in the operating systems business for the first time. It will be interesting to see how much strategic importance the company places on its own OS relative to those of its competitors/business partners it has dealt with for decades.
And what is inside Sun’s technology candy store? Sun has poured billions into development of hardware and software products over the years, some of which were never delivered or put on hold because of tough financial times. Will company officials talk about some hidden hardware gems that could help Oracle’s budding cloud computing and older grid computing software run faster or more efficiently?
And will Mr. Ellison and cohorts give any indication about how they might approach licensing server hardware (not by the processor, Larry, please), or coordinate maintenance and support of users common to both companies, or if and how they will combine data centers?
It is probably too much to expect detailed answers to all of these questions, although Oracle is certainly giving itself enough time (five hours) this Wednesday to address any and all of these matters.
Whatever it reveals, Wednesday figures to be the first day of a very interesting era in Oracle’s already colorful history. It has a real chance to significantly redefine itself, not easy for a 32-year-old, $25 billion company to do, and in the process also change the competitive landscape of the IT industry.
With this new-found power and position let’s hope Larry and company handle it with more humility than hubris.]]>
“I am now satisfied that competition and innovation will be preserved on all the markets concerned. Oracle’s acquisition of Sun has the potential to revitalize important assets and create new and innovative products,” said Neelie Kroes, the European antitrust commissioner, said in a prepared statement.
Oracle’s proposed acquisition of Sun took almost nine months to the day to gain approval by both the U.S. Department of Justice and the EC, with the latter’s investigation dragging on for over three months.
Go to this article to learn more details about the EC’s approval of the Oracle-Sun deal.]]>
According to various news reports over the past couple of days, both parties are close to announcing a deal that could come as soon as this week. The EC’s deadline for issuing its ruling is January 27, but sources cited in most reports indicate it likely will be formally announced by week’s end.
What’s something of a mystery is what exactly has held this deal up since mid-December. About six weeks ago the EC issued a statement that Oracle had made a number of breakthrough concessions that had addressed all of its concerns, most of which focused on Oracle’s proposed ownership of the open source MySQL database. The agency was “optimistic” that the proposed $7.4 billion acquisition posed no threat to the European database market. With that statement many felt a formal announcement was just a day or two away.
And then — nothing.
Hopefully we can chalk this latest delay up to the umm, mercurial nature of the EC and nothing more. If this delay centered around issues other than MySQL, that would be rather unfortunate at this late date.
But reports indicate that both parties really are ready this time to end this long, strange dance. What is giving recent reports added credence is Sun reportedly readying three different email announcements to be delivered to its employees in the next day or two. One e-mail will be to those employees letting them know they will be keeping their jobs, a second will go to those who will be terminated, and the third will be sent to those being offered a temporary position that will last through an undetermined transition period.
There is no indication from reports how many Sun employees will receive e-mail Number 2. There were scattered reports last month that Oracle planned to eliminate half of Sun employees after it acquired the company. Those reports were quickly followed by a public statement from Oracle chairman Larry Ellison that there was no way they would cut that many jobs and that his company would be depending on Sun employees more than ever to make this deal work.
Let’s hope for the sake of the sake of Sun employees many, many more receive e-mail Number One.]]>
While the EC has now spent well over three months investigating the dangers of Oracle owning both the leading proprietary and open source databases fearing it would use its monopoly position for evil, their answer for achieving competitive balance in the market was out in plain view.
In a word that answer is Postgres. The Postgres open source database is not only a respected competitor in the open source database market, but has a feature set that allows it to compete against some higher-end proprietary database.
“If their (EC’s) goal is to promote competitiveness and have a truly independent open source project with hundreds of thousands of users that serves as an alternative to Oracle they should focus on Postgres,” said Ed Boyajian, EnterpriseDB’s President and CEO.
Granted, EnterpriseDB may be the biggest supporter of Postgres and has built its business around the product. But Boyajian makes a couple of important points as to why Postgres can keep democracy alive in the open source database market.
For instance, from the start MySQL was built to accommodate the creation of lightweight, Web-based apps developers can use to create using scripting languages, it was hardly meant to create applications capable of handling heavy duty workloads.
“MySQL helped create apps that were read intensive, Web-based, not the sort of apps created by traditional corporate developers who work with C and C++ and Java. The fact is MySQL never competed with Oracle for that type of workload,” Boyajian said.
Postgres on the other hand is designed to create true enterprise-class applications that require concurrency and data consistency, according to Boyajian, the kind of applications that can give Oracle and IBM a run for its money.
“This is not a subtle thing to the people in the database market, but it looks to be a subtlety to the EC. This is something they are not fully understanding in this investigation,” Boyajian said.
What bolstered Postgres’ position as a strong alternative to MySQL is the recent investment by IBM in Enterprise DB. With IBM’s backing — a major competitor to Oracle in the proprietary database market and strong supporter of open source – Postgres future looks pretty secure.
The other distinction the EC has seemed to overlook, Boyajian notes, is the basic fact there are two kinds of open source companies: those that are community controlled and so truly independent like Postgres, Apache and Linux; and those which are commercially sponsored such as MySQL and JBoss.
This is not to say a commercially sponsored open source product can’t be successful. After all the creators of MySQL sold it to Sun for $1 billion, but it will be better for users to have an alternative that doesn’t come with a Big Brother lurking over its shoulder.
Let’s hope with the dawning of the New Year, the EC confirms reports last week’s reports it has come to some meaningful compromise with Oracle so we can save jobs at Sun, stimulate competition among enterprise competitors, and put all this nonsense behind us.]]>
After three months of investigation, and some pointed exchanges between the two along the way, it appears Oracle and the European Commission are on the verge of settling their differences over Oracle’s proposed acquisition of Sun Microsystems.
Earlier today the EC issued a statement indicating Oracle had made a number of concessions that eased its antitrust concerns, and were now “optimistic” that such a deal would not pose a threat to the European database market, according to a story in the New York Times.
According to the report, Oracle has agreed to protect the viability of the MySQL open source database, meaning it would not discontinue it or otherwise not support and maintain it as well as they could, thereby opening up more opportunity for Oracle’s own proprietary database.
Neelie Kroes, the EU’s Competition Commissioner, said that Oracle has made “significant” commitments to support MySQL, and that once Oracle takes over MySQL promises to extend MySQL’s existing licenses for up to five years. Oracle will also pledge to make guarantees to end user organizations and individuals now using MySQL that it will not pursue intellectual property claims, according to the Times story.
In a statement Kroes said she believed the commission’s investigation would have “a satisfactory outcome.”
Another concession by Oracle involves spending over $72 million spread over the next three years on research and development that would go towards improving MySQL, a sum Oracle has claims is more money than Sun itself had spent on developing the program.
Also, Oracle promises to spend more than $72 million over the next three years in research and development to improve and refine MySQL, which Oracle said was more money than Sun had been spending on developing the program.
While the parties seem to be a matter of days from finalizing an agreement, some European observers quoted in the Times story caution that the deal is not a certainty and will not be until both parties jointly announce it.
There was no indication in the EU’s statement or from Oracle officials when the EU’s approval of the Sun acquisition would formally be announced.]]>
Multiple reports today say Ellison is willing to setup a separate entity within the combined Oracle-Sun that would be responsible for operating the MySQL open source database business, as a way to appease the EC and bring to a swift end that organization’s three-month long investigation of the deal.
Reports say Oracle plans to present the proposal to the EC before its scheduled Dec. 10 hearing with that agency in Brussels. At that meeting Oracle is expected to present its case for why its gaining control of MySQL will not create unfair competition in the database market thereby limiting buying choices among European buyers.
Oracle’s decision to initiate a compromise comes as something of a surprise, given the decidedly uncompromising comments Ellison made less than a month ago saying he planned to “vigorously oppose the European Commission’s Statement of Objections,” and he was confident that Oracle would “obtain unconditional clearance of the transaction.”
There were no specifics in the reports detailing exactly how a firewall would be set up between MySQL and the rest of the Oracle-Sun business, particularly Oracle’s proprietary database business. Oracle reportedly however is willing to establish a separate board of directors for the proposed entity overseeing MySQL’s business.]]>
Oracle, of course, was going to be one of them along with IBM and Hewlett-Packard. Larry didn’t consider Microsoft or Dell to be legitimate competitors selling to large enterprises and/or he assumed they would be marginalized by the competitive strategies of Oracle and the other two surviving kings of IT.
About a month after that blog, Oracle announced its plans to acquire Sun Microsystems, and it appeared Larry had taken a giant step toward crystallizing his prediction. Indeed, acquiring the core assets of Sun gives him all of the major hardware and software assets – both proprietary and open source — he lacked to compete worldwide against IBM. The delicious irony there was Larry grabbed Sun away from IBM.
I did note in that March blog that what would secure Oracle’s fate as one of the last three IT survivors, once it acquired Sun, would be buying Red Hat given its dominant position in the open source world. As cost-conscious IT shops both large and small gravitate in even bigger numbers to open source, I still think Oracle will buy them over the next year or two.
But since early September, when the European Commission (EC) announced it was going to investigate the Oracle-Sun deal, focusing particularly on Oracle’s possession of the open source MySQL database, Larry’s plan for domination of Planet IT is on hold.
It remains inconceivable to me that the EC will block this deal, a deal that passed muster with the U.S. Department of Justice. But now seeing the almost religious crusade the EC is on more clearly, together with the almost legendary obstinance of one Lawrence Joseph Ellison, it now seems a more real possibility the deal could be blocked. I suppose we’ll know better how to evaluate that prospect after the Dec. 10 meeting where Oracle gets to plead its case, and certainly by Jan. 27, which is the deadline for the EC to make its final ruling.
But if it does happen, and Larry doesn’t pursue what figures to be a lengthy process through the European courts, it will be bad not only for Sun but for Oracle as well. It’s bad for Sun for obvious reasons given its rapidly declining market share and revenues in servers. With Sun losing $100 million a month the last few months, who would be interested in taking it over? No one is my guess, not even IBM which made a generous offer in hindsight.
But Oracle will suffer, too. It will certainly have to give up its dreams of selling a variety of integrated hardware-software stacks, something top company officials have made clear would give them a huge advantage over its software-only competitors such as SAP and Microsoft. It won’t be able to compete as a broad-based solutions provider armed with chips, servers, storage devices, a significantly expanded open source portfolio and, oh yeah, control of a little piece of software called Java ala IBM.
It will have to revert back to being plain ol’ Oracle. Not that it’s bad thing to be a $25 billion company with a commanding share of the database market with its fire hose-like flow of maintenance revenues, as well as being a major contender in several other enterprise software markets. And Larry can still be as bad as he wants to be, flamboyant, brash and intimidating competitors as well as his own users alike. He’ll just have to do it without the collection of shiny hardware toys.
More seriously, not only will Oracle not have these weapons, but in the meantime its major archrivals have grown and will grow stronger. IBM will be an even more formidable presence when it comes to selling hardware-software-services solutions without Oracle-Sun to compete with.
Without MySQL Oracle will not be able to take advantage of the growing service and maintenance revenues in the open source database market and not have the chance to help shape the direction of open source in general.
Without Sun’s portfolio of virtualization and storage products, competitors such as VMware, IBM and Microsoft can lengthen their already significant lead over Oracle in areas such as cloud computing. (And yes I know Larry doesn’t formally recognize the term cloud computing, but he sure would recognize the future revenues from it).
If Larry’s prediction of a three-company IT world doesn’t come to pass, it won’t be for his lack of trying. Who knows, Larry may actually like living in a five-, six-, or seven-company IT world. One thing I do know, if the latter scenario comes to pass Sun as we know it won’t be around to see it.
Let’s hope for the sake of thousands of American jobs the EC wakes up and approves this deal so another iconic high tech company doesn’t fade away.]]>
This is hardly a stunning development, although Chairman Ellison may find some comfort in knowing he has the backing of 20,000 database administrators, developers, architects, technical managers as he continues on his crusade.
Late last week the IOUG released a letter opposing the EC’s Statement of Objection, in which the EC made clear – again — what would happen to European users’ freedom of choice if Oracle controlled both its own dominant proprietary database and MySQL.
In the IOUG letter president Ian Abramson tried to make the case that by owning MySQL, Oracle would actually increase competition in the database market instead of limiting it. As evidence he pointed to Oracle’s staunch support of open standards along with how it has treated several open source technologies it has acquired over the past decade.
“Consistently, Oracle has demonstrated its intention to define standard approaches that are open to all, and the acquisition of MySQL is expected to be no different,” Abramson wrote. “Oracle has shown it is a company that supports open standards. We anticipate that Oracle will continue to foster innovation and openness with MySQL following the acquisition and not hinder competition.”
Underlining his point about how well Oracle is capable of working and playing well with others in the open source world, he cites several acquisitions the company has made and how well those technologies have done since including TimesTen, Berkeley DB and Hyperion’s Essbase.
Abramson added that should Oracle decide to “deviate” from this pattern of behavior of the way it has treated the technologies it has acquired, it is his belief the market would be quick to drive a whole new set of viable competitors into the open source world.
In the latest go round involving the EC’s Statement Of Objection to the Oracle-Sun deal, Ellison and the EC’s Neelie Kroes slapped each other around pretty good. Ellison gave the EC a backhander saying its objections were based on a “profound misunderstanding of how open source worked, and Kroes countered with a sharp left hook labeling Ellison’s criticism as “facile and superficial.”
Why is this battle over a free piece of software, which represents such a small part of the overall $7.4 billion deal growing increasingly contentious? Some good answers were given in a New York Times story that points out this case is helping surface the very different views of open source software.
First open source software is much more economically important to Europeans than it is to Americans. In the story Michael Cusumano, a professor at MIT’s Sloan School of Management says the trans-Atlantic “megawar” makes sense in that “the Europeans come to the defense of open-source companies because the big proprietary companies are nearly all American.”
The story goes on to say European governments have looked at open source software as a “potential tool of economic development and independence.” For instance, according to the story, several major European countries actively encourage local and central governments to consider products like MySQL and Linux over proprietary platform such as Oracle databases and Microsoft’s Windows.
The EC is clearly considering what this decision might mean to the overall health of some European economies. It appears to be a much more important consideration to the EC than it was to the U.S. Department of Justice who approved the deal with not too much muss and fuss months ago.
So this battle could serve to resolve a much larger issue than what havoc Oracle might wreak among its competitors with a free database. It continues to be a crime that Sun employees lose their jobs as these two haggle over what this solution should be? If it goes badly for Oracle at the scheduled Nov. 25 meeting with the EC, and the latter formally blocks the deal by the Jan. 19 deadline, and if Oracle decides to take the EC through a protracted trial, there won’t enough of Sun left to make this worth Oracle’s while.]]>
First came reports late Tuesday that the European Commission (EC) was nearing a decision to issue an official statement of objection over Oracle’s proposed bid to acquire Sun Microsystems. Issuing such a statement is largely considered the first step toward blocking the 47.4 billion deal.
As has been reported here and elsewhere over the past couple of months, the focus on the EC’s two-month long investigation continues to be on Oracle gaining possession of Sun’s MySQL, the market leading open source database. EC officials believe Oracle’s control over both the leading proprietary database and the leading open source database would significantly limit the buying choices of European users.
The EC reportedly is seriously considering issuing a statement of objection because Oracle has failed to get back to the organization with evidence that the proposed deal would not cripple competition after several requests.
The EC has not blocked mergers of this magnitude very often, but Larry seems to be testing their patience. No word yet whether Larry and his right hand woman, Safra Catz are on a plane heading to Brussels to better explain themselves.
The second bummer for Team Oracle this week is the 200-foot mast on the company’s gigantic trimaran, which is expected to represent the US the America’s Cup, snapped and came crashing down while sailing out in the Pacific ocean. The gigantic craft had to be towed back to its berth. Estimated cost of the boken mast, a whopping $10 million.
Is this an omen of some news that could be coming out of Brussels]]>