Exadata Database Machine

Oracle, Sun roll out Exadata 2

Even as the European Union continues to dig into the validity of Oracle’s $7.4 billion proposed acquisition of Sun Microsystems, Oracle chairman Larry Ellison showed off the first product jointly developed by the two companies, confidently calling it “the fastest machine ever built for data processing.”

In a presentation, where he was joined on stage by John Fowler, a senior executive with Sun, Ellison said the Exadata Version 2, which marries Oracle’s database software with Sun’s FlashFire technology, is twice as fast as the original, and is significantly faster than the fastest machine made by archrival IBM.

“We are the fastest in the world for data warehousing and by far the fastest for online transaction processing, because we have optimized random I/O. We can do over 1 million random I/O instructions per second, which is significantly faster than anything IBM has,” Ellison said.

Ellison remarks were counterpunches clearly aimed at both IBM and Hewlett-Packard Co., both of which have mounted aggressive campaigns over the past few months hoping to steal away Sun customers while the Oracle-Sun deal met final approval.

Just in the past couple of weeks IBM says it has won over 250 customers in the first half of this year, claiming that is growing more rapidly since Oracle announced its intention to buy Sun on April 20.

Ellison said two other advantages of Exadata 2 are that all of its basic components are fault tolerant, and that large IT shops can scale its capabilities in cloud computing environments.

“People talk about cloud computing where if you need capacity you can just allocate it. Well that’s a nice concept if your database systems can add capacity in that environment. Ours’ is the only one today that can do that,” Ellison said.

Exadata Version 2 is available in four models including a full rack consisting of eight database servers and 14 storage servers, a half-rack with four database servers and seven storage servers, a quarter-rack with two database servers and three storage servers and a basic system with1 database server and one storage server.

All four configurations are available immediately.

We’ll have more coverage of Exadata 2 later on Wednesday.

The EU fiddles while Sun burns

The European Union has always taken a tough stance against large American companies who look like they are on the verge of abusing their monopolistic positions. Oftentimes it has been tougher on such American companies than our own Department of Justice.

But the EU’s latest objection over the Oracle-Sun deal has little to do with being a watch dog ensuring fair competition and more to do with being an attack dog. We have to assume that EU competition commissioner Neelie Kroes has nothing in particular against Sun Microsystems, but through this upcoming investigation she could do irreparable harm to the company as well as to the fortunes of the newly combined company.

Even before the proposed deal, Sun was a distant fourth behind IBM, Hewlett-Packard and Dell for server hardware market share. Since the April 20 announcement, Sun’s market share is in freefall as Sun customers freeze their buying decisions waiting to see what Oracle will do with its hardware business. Adding insult to injury IBM and HP have had a field day picking off Sun users through aggressive new pricing programs.

In late August, Sun suffered its fourth consecutive loss this time reporting it lost $147 million in its fiscal fourth quarter compared to a net gain of $88 million in the same quarter a year ago. The company’s revenues plummeted 31% in the fourth quarter to $2.36 billion. If the EU investigation goes on for even another quarter or all the way to its January 19 deadline - and some pundits believe it will - there will be very little left for Oracle to work with going into 2010.

With Sun’s server business shriveled to that of a second tier supplier, what does this do to the soup-to-nuts, integrated stack computing strategy Oracle executives have been yammering on about since last spring?  More than a few users I have talked to the last few months are now cozying up to the notion of an integrated hardware-software stack from Oracle. They point to the company’s Exadata Database Machine — Oracle databases optimized to run hand-in-glove with HP’s server hardware — saying the system far out distances the performance they get with databases they purchased separately. Can Oracle just walk away from that promise and still look good to users? I don’t see how.

And if Oracle is hoping to pawn Sun’s failing server business off to an IBM or HP after this EU mess gets straightened out in three, four or six months, they may face a fierce level of indifference.

In her statement last week Kroes made it clear one of the major reasons for the investigation is her concern over the world’s largest proprietary database maker taking over the world’s largest open source database. With one company owning all that database software, bad things most certainly are going to happen to database competitors in Europe and user choice will be nill, right?

Come on now, Neelie, this is open source we are talking about. No one can truly own and control a popular open source product like MySQL - it belongs to the community. The best Oracle can do is coordinate some of the development going on around the product. Most open source licenses demand that whatever you create must be thrown back in to the open source ocean for others to use and/or build on.

There should be no fear about MySQL being “Oraclized” taking the heart, soul and brain out of the product so it works better with Oracle’s proprietary products. If Larry’s boys do something like that non-Oracle shops don’t have to buy it. There will always be another version out in the community.

And one other thing: does Oracle’s proprietary database comes close to competing head-to-head with MySQL? Hardly, they are at opposite ends of the competitive spectrum.

So Neelie, for the competitive good of the industry, make this a quick investigation. Competitors are quite able to destroy each other and sometimes themselves - they don’t need any outside help.

Can Oracle stay on a roll?

Oracle has weathered this 18-month long recession (and counting) better than many of its enterprise competitors. Well, at least so far.

The company’s quarterly financial reports over the past year have pleased Wall St. analysts, thanks largely to its perpetually steady maintenance revenues. Company officials have also pointed out over the past month or two pockets of growth in its broad product portfolio including its Exadata Database Machine and Fusion Middleware offerings. Licenses of its bread and butter database products however, have been flat to slightly down.

But most recently there are signs that maybe this wicked and seemingly unending recession is taking a toll on the folks in Redwood Shores.

In its financial statement last month for the quarter ending May 31, Oracle took a half step back. The company reported a net profit of $1.9 billion which is down 7% from the same quarter a year ago, while revenues tumbled 5.2% to $6.9 billion. But even this news wasn’t received so badly by Wall St. analysts who were expecting Oracle to lose even more.

In a note of caution however, Peter Goldmacher, an analyst with Cowen & Co., wrote last month he believed “Oracle’s standalone margin profile is unsustainable, and the pending acquisition of Sun is going to be more challenging than the current valuation implies.”

Then Oracle announced it was cutting up to 1,000 jobs in Europe. It isn’t the 5,000 layoffs that Microsoft announced a while back, or the 9,000 people IBM has let go this year, but still an indication the company was looking for ways to tighten its belt. Again this news is not so bad, but it is no reason to break out the champagne either.

But then two weeks ago the company announced it was halting construction of a mammoth $313 million data center in West Jordan, Utah.  The 200,000-sqaure-foot facility will store customers’ data and be dedicated to supporting the products and services of its on-demand division. Oracle officials recently said revenues from that division have been growing at an impressive 25% a year.

It’s logical to assume this building, which will serve as the model for other “green” facilities Oracle is planning, will be instrumental in helping Oracle launch whatever cloud computing strategies it has planned. And the company will pursue a cloud computing strategy, despite some ambiguity about that issue coming from Mr. Ellison from time to time. Hasan Rizvi, senior vice president, Oracle Fusion Middleware Products, made that clear speaking at the company’s Fusion Middleware 11g announcement earlier this month.  

Oracle didn’t offer any specific reasons for halting construction nor did it say when it would resume the project. What made some people nervous, particularly those in the state of Utah where the data center was projected to bring some $500 million in new state revenues over a 12-year period, was that Oracle used the word “postpone” in its only official statement.

On top of sales of new software licenses being down, it could be the fact Oracle will be shelling out $5.6 billion very soon for Sun, which could be weighing on the company’s decision to halt construction.

While faring better than its enterprise archrivals, Oracle will need the economy to improve significantly if corporate customers are going to spend more on new software licenses in the second half of this year. Maybe Fusion Middleware 11g and its associated tools, announced July 1, will help coax more dollars out of those tightly closed wallets.

How will Oracle do when the chips are down?

The good thing about Sun canceling development of its 16-core Rock processor means Oracle now has one less set of multi-core servers to fret over with its cores vs. processor licensing policy. The bad news is the new Oracle, hoping to compete against the likes of IBM and Hewlett-Packard from chips to business process software will come to battle with a few less bullets.

I am only half kidding, of course, about the good news part. For better or worse (worse many users say) Oracle doesn’t fret much over whether it should license servers by the processor core or by the box. It unflinchingly continues to license by the number of cores, which could prove an expensive proposition for some buyers.

The bad news I may not be kidding about so much. With Sun kicking its five-year old Rock project to the curb, Oracle can’t make the next leap in the game of performance leapfrog it plays with chip rivals IBM and Intel.

In fact, Sun has failed to leap a couple of times having canceled its UltraSparc-V chip project earlier this decade because it essentially ran out of development funds. The company rushed out its UltraSparc-IV chip as a stop-gap product that didn’t do much. And when Sun was skipping a leap, a couple of other times it was very slow to leap, being months even years late in delivering a new chip.

Sun officials have talked consistently the past few years about the Rock being a game changer. The chip was designed to achieve a much higher per-thread and floating point performance, along with greater Symmetrical Multi-Processing capabilities than its Niagra family of chips.

Rock, which was to anchor the company’s Supernova line of servers, was supposed to really shine when it came to handling high-end data facing workloads including database servers. Just guessing here, but I think a machine delivering great database performance would be important to Oracle.

With Rock out of the game Sun will continue to use Fujitsu processors, which will be fine, but hardly represents the game changer the company was hoping for. One positive aspect to all this is that Sun’s research and development costs just got significantly lower. This won’t make Larry Ellison unhappy as he tries to complete the $7.4 billion acquisition of Sun.

But once again Sun has opened the door wide open for a number of competitors to rush through, most notably IBM. With one less competitor at the high end, IBM figures to rip away more server market share from Sun over the short term. Some speculated over the last day or so that Oracle might start to emphasize the next gen Niagra III Sparc chips, as well as pushing Solaris on x64 servers fueled by Intel’s upcoming Nehalem EX servers.

Sun has been relying on chips from Fujitsu for its larger servers while it waited for the Rock development to be finished. Now it is likely to just continue using Fujitsu chips, which should lower research and development costs.

But what does the lack of a “game-changing” chip like Rock do to Oracle’s plans to sell vertically integrated hardware-software stacks (as has been rumored) ala its Exadata Database Machine? It could hurt its newly acquired hardware business for sure, but perhaps more importantly hold back its flagship database business at the high end in some key markets, along with other proprietary and open source software offerings.

We knew Oracle was buying some damaged goods with its acquisition of Sun, but I am not sure if Redwood Shores was assuming its chip business might be this damaged.