The Service Industry Association, a group made up of about 130 hardware maintenance providers, is calling Oracle’s hardware maintenance policies anticompetitive and has filed an appeal with the U.S. Department of Justice (DOJ). The DOJ gave Oracle the green light for the Oracle Sun acquisition last year, and the European Commission approved the deal in January after assuring that fair competition would be preserved in the market.
But the SIA has a different view. It claims that Oracle is abusing its dominant market position with its new hardware maintenance policies, especially in regards to the $2.4 million of Sun maintenance business contracted to Independent Service Organizations (ISOs). ISOs are now prevented from servicing the hardware break-fix needs of its Sun hardware customers, it claims.
Alleged anticompetitive practices of Oracle by the SIA include:
In other news, Oracle has filed a lawsuit of its own against a hardware partner, Multis. Multis had a contract with Sun Microsystems when Oracle purchased Sun, and its contract involved services related to remanufacturing Sun technology, such as product refurbishing and distribution.
Multis has had three burglaries at one of its warehouses since July 2009, and now Oracle is seeking damages of at least $328,742. The software giant is claiming its partner did not have insurance to cover the losses from the thefts, and according to their contract, Multis is liable for the product losses and damages from the burglaries.]]>
So, does this mean Oracle is ready for its next big acquisition?
That’s what some are saying, as speculation is growing that Oracle is looking to buy the data storage systems company EMC in a deal that would likely also come with the leading server virtualization software, VMware, of which EMC owns 80%. Stock prices of both EMC and Oracle have even been reflecting this recent rumor, though some analysts are saying that while it is a possibility, such a deal is not the most likely scenario.
Still, with Oracle’s recent focus on cloud computing and the failure of its own OracleVM’s ability to compete with VMware in the virtualization market, the idea isn’t too far-fetched. Both the storage solutions and virtualization software that EMC would offer could both be great assets for Oracle’s Exadata and Exalogic machines. And, of course, Larry Ellison is not one to pass up a deal that would continue to increase Oracle’s power in a number of markets.
As we wait to see if Oracle will make yet another deal that could alter the entire IT landscape, what questions do you have? Do you think this deal would make sense?
After I posed this question in a SearchOracle.com newsletter on Monday, I received some mixed feedback from readers. One reader thought the deal would make sense because of the benefits that VMware could bring to both public and private clouds. He wrote:
“I saw a virtual environment working on Oracle with VMware here… I really would recommend this deal. But not knowing exactly what the strategic objectives of Oracle are I cannot know.”
Another reader also thought the deal would make sense, but for a different reason:
“This will take Oracle solutions to the next level (highest one in my opinion). For instance, in our company we suggested buying an Exadata machine and all benchmarking went well, except one thing that made the whole thing be refused, which is that Exadata storage is not EMC-based, so we simply took the option out and went for home-built RAC architecture.”
And one other reader just had this to say:
“Just another opportunity for Oracle to provide terrible support on a new acquisition.”]]>
Oracle has sued memory manufacturer Micron Technology, Inc., a federal lawsuit that looks like a money grab for transgressions that happened 10 years ago.
The lawsuit, filed on Friday, aims to “recover damages caused by a long-standing conspiracy among manufacturers of dynamic random access memory (DRAM) computer chips.” In addition to Micron those conspirators, according to Oracle and based off a federal Department of Justice investigation, include Hynix Semiconductor, Infineon Technologies, Elpida Memory and Samsung. It is unclear why Oracle is only suing Micron right now.
In the lawsuit, Oracle refers to these companies as “the DRAM cartel.”
The DOJ found that the companies, which accounted for about three-quarters of DRAM manufacturing in 2000, engaged in price fixing to close off the market and overcharge customers. Oracle is claiming that between 1998 and 2002, Sun bought more than $2 billion worth of DRAM at inflated prices for use in its servers and workstations.
The DOJ investigation wrapped up in 2006 and led to billions in fines for the companies, and even imprisonment for some.
Now as for Oracle’s reason for bringing the lawsuit:
“Oracle, as successor in interest to Sun, has standing to bring this action, because Sun purchased DRAM from Micron and its co-conspirators during the Conspiracy Period. In doing so, Sun was injured by Micron’s and it’s co-conspirators’ unlawful actions, because it paid more for DRAM than it otherwise would have, as described more fully above. These higher prices caused Sun to lose money and customers, who could not afford to purchase Sun’s products containing artificially high-priced DRAM.”
Though Oracle might have a legal argument here, the logical idea of it seems far-fetched. When Oracle acquired Sun, it paid $7.4 billion, or $9.50 per share. Back in the early 2000s, Sun stock was going for north of $200 per share.
So now Oracle is suing Micron for causing Sun to lose money and customers, which eventually led to its stock being cheap enough so that Oracle could buy Sun. Right?
Shouldn’t Oracle be thanking Micron here?]]>
Larry is no newcomer to acquisitions — or successful ones either. But the way that Oracle’s CEO gauges an acquisition’s success is likely in many ways different than how his employees and customers see it.
Last week, Oracle announced that Oracle would be cutting more Sun jobs than it had originally stated in its Sun restructuring plan back in February. The fact that Larry is going against his original claims now puts his credibility – and his purposes for the Sun acquisition – into question.
Blogger Rob Enderle thinks that Larry’s miscalculation about layoffs is signifying a larger problem. “It speaks to how difficult the Sun acquisition is proving to be and raises the specter that it might actually visibly fail” he writes in his recent post, “Is Snorkel (Sun and Oracle) sinking?”
But just like Larry, Enderle knows a thing or two about acquisitions. He used to run a post-merger clean up team for IBM, and has seen what causes most mergers to fail (the majority of which do, he writes). Enderle discusses three key merger problems that are contributing to the downfall of Sun and Oracle: due diligence, inadequate merger plan and image maintenance.
When it comes to image maintenance, Enderle says that organizations and executives often cover up problems with the merger to protect their image. At some point, however, the problems emerge, and usually at the point when they are much worse than they were to begin with.
This is what happened with the recent layoffs, Enderle writes. After making an initial announcement that Sun employees would not have to worry about layoffs, this layoff announcement and subsequent actions were delayed, incurring extra costs.
According to Enderle, this is only the beginning:
If this is happening in one area, it is likely happening in others as well. Layoffs of this scale typically have a lagging impact on the performance of a firm as processes and relationships that depend on these ex-Sun employees degrade across the firm. This suggests that the Sun-Oracle merger is in deep trouble.
What do you think about the current state of Oracle/Sun? Do you agree with Enderle and think there are existing problems that have not yet emerged? Any predictions?]]>
Reuters posted a lengthy and detailed story on Oracle and Larry Ellison today. As usual, whenever someone talks to Ellison, there is plenty of dirt. In this story, Ellison dishes on former Sun CEO Jonathan Schwartz, basically saying he wasn’t a good CEO, and forecasts the future of Oracle hardware.
Ellison criticizes Schwartz at length in the story, saying he spent too much time on his blog and not enough time managing the company correctly.
“The underlying engineering teams are so good, but the direction they got was so astonishingly bad that even they couldn’t succeed,” Ellison told Reuters. “Really great blogs do not take the place of great microprocessors. Great blogs do not replace great software. Lots and lots of blogs does not replace lots and lots of sales.”
Ellison added that the sales deals Sun made — and the commission structure around them — were often nonsensical. In some cases, Sun would lose $1 million on a deal. And the salespeople were making commission on the size of the deal, rather than the size of the profit.
This, of course, is no surprise to any Oracle watchers. Oracle has always been about extracting big profit margins whenever and wherever it can. That explains the reason why Ellison and Oracle are pushing Exadata and Sun’s Sparc-based servers over commodity x86. It makes more money, even in a declining Unix market.
Ellison details why Oracle dropped Sun’s “Rock” processor, a yearslong project that encountered multiple delays and never got off the ground. According to Ellison, it ran too slow and ran too hot, and was basically a time and money sink.
“It was so hot that they had to put about 12 inches of cooling fans on top of it to cool the processor,” Ellison told Reuters. “It was just madness to continue that project.”
Ellison said Oracle would be “pruning” down its x86 server line and will continue to push its stack strategy hard. It plans to unveil more Exadata-like products this fall at Oracle, including one that includes the yet-to-be-released new group of Fusion applications. It already announced Exadata 2 last year, a Sparc-based box built for data warehousing and OLTP. Whether it succeeds is a question, as it only sold about 20 of its previous HP-based Exadata appliance.]]>
The number one programming language is not being ignored. Oracle executives – and the Father of Java himself, James Gosling-have been speaking about its future at recent conferences. They‘re addressing not only their plans and goals for the programming language, but who they want to see using it: ”I would like to see people with piercings doing Java programming,” said Oracle’s Jeet Kaul, referring to getting a younger generation more excited about Java.
So, what is there to get excited about? Here are some of the Java technologies recently discussed at TheServerSide Java Symposium in Las Vegas and the EclipseCon conference in Santa Clara, Calif:
According to Gosling, he’s “pretty encouraged about the way things are going to work out.” But are you? What concerns do you have about Java? Do you think Oracle can successfully keep all aspects of it alive?]]>
As Oracle works to ease anti-competition concerns over the MySQL open source database, its takeover of Sun Microsystems has been approved by the U.S. Department of Justice and the European Commission. And as of last Friday, we can also add Russia to that list.
Russia’s anti-monopoly regulator (FAS) approved the deal on conditions that Oracle continues to develop MySQL and create new versions of the database. FAS also said that Oracle should allow customers to buy commercial licenses for MySQL without being required to purchase Oracle services.
Some members of the open source community seem to still be holding out hope, however, that they can “save MySQL” from Oracle. This campaign and online petition driven by MySQL founder Monty Widenius was launched over concerns about competition and Oracle’s “empty promises.” The petition is still active, with its latest statistics showing 25 sign-ups in the past 24 hours (and 42,723 total).
But are we finally starting to see that regulators and the general open source community may have less to worry about than they think?
According to some, yes. In his blog post, “MySQL’s new best friend forever? Oracle,” Cnet’s Matt Asay discusses his takeaways from talks with Oracle executives at last week’s Open Source Business Intelligence Conference. Asay says that it seems like Oracle will not only continue to invest in MySQL, but increase its investment in the open source database.
“The little-open-source-database-that-could will become the not-so-little-open-source-database-that-does,” he writes, referring to the effect that Oracle’s long history of expertise in database engineering could have on MySQL’s future.
Still, Oracle has some hurdles to cross. Even with Oracle’s own expertise, it also needs the help and knowledge of veteran Sun staff, many of whom, such as Chief Open Source Officer Simon Phipps, have recently left the company. The growing popularity of the NoSQL movement could also be a threat to MySQL offerings. NoSQL, a termcommonly translated as “not only SQL,” refers to open source databases that are non-relational and horizontally scaled. Their increased scalability and flexibility are making them a new alternative that is ideal for Web applications needing to handle large amounts of data storage. It should be interesting to see how (and if) this has any major impact on the use of MySQL.
Do you think Oracle will live up to its promises on MySQL, given these recent developments? Or should we really be worrying about the rest of Sun’s open source products (Java,OpenSPARC, GlassFish, etc)? With all the attention on MySQL, is there a chance of these being forgotten?]]>
Simon Phipps, one of the most vocal supporters of open source inside Sun Microsystems announced in his blog yesterday that he is stepping down from his post as Chief Open Source Officer. He didn’t write his farewell as a haiku, ala former Sun CEO Jonathan Schwartz, but it was poetic nonetheless.
Phipps, a 10-year veteran of the company, didn’t spell out whether he was being forced out or was leaving on his own. But given Oracle is now in a position to be the most powerful open source company in the industry, and could crystallize some of the goals Sun didn’t get a chance to complete, one has to wonder.
In his farewell blog Phipps cites several of those unrealized goals. Phipps said he is “sad” the company didn’t get the code for those projects that remained permanently outside the Sun firewall, that Apache failed to get the TCK license Sun requested, that the company never got to a place where co-developers became more of a priority for a number of Sun’s product groups.
Lastly, perhaps in a jab thrown at Oracle, Phipps writes he is disappointed that despite the overall success of the company’s open source business, “it still wasn’t enough to rescue Sun in the end.”
Still he looks back with pride on what he believes are Sun’s major contributions to the open source community. Under his reign he says Sun got “some of the most important software in the computer industry,” released under Free licenses thereby guaranteeing “software freedom” for people regardless of own the copyrights including Unix, Java, key elements of Linux and the Sparc chip.
Another major accomplishment was creating the Open Document Format, which he said was instrumental in guiding “the quiet revolution” that has helped restore competition to the productivity software market.
Announcing his departure though his blog is appropriate given he believes one of his major accomplishments was starting the first blogs at Sun.blog.com, which kicked off the “corporate blogging revolution.”
Lastly, he takes satisfaction in changing Sun’s attitude about open source turning colleagues who were bitter critics of the technology into defenders of it, and even convincing people to join Sun because of its fervor in supporting open source.
Besides continuing to blog, Phipps says he has not decided what he will do next. Given his resume Phipps shouldn’t be unemployed long, unless he chooses to be. I think IBM might be interested in talking to Phipps and getting their hands on his little black book containing Sun’s open source plans.
Oracle has yet to fully spell out its plans for how it intends to leverage Sun’s rich portfolio of open source products and technologies – aside from committing lots of cash to the care and feeding of the MySQL database.
But open source figures to be an important if not strategic asset to Oracle for both its proprietary and newly acquired open source portfolios. It will be particularly important as it engages Microsoft in hand-to-hand combat at the lower end of the enterprise market. It should be careful about the open source talent it lets walk out the door.]]>
“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.]]>
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.]]>