Oracle

More on the pending Oracle-Sun acquisition

Earlier this week I wrote about the pending Oracle-Sun acquisition, and how Sun Microsystems customers were getting pretty tired of being in limbo, waiting around while antitrust regulatory agencies here and across the pond decide whether to approve it.

Shortly after I wrote my story, in addition to one of our contributors Bill Claybrook writing a solid story on whether x86 Solaris would survive the Oracle acquisition, Clabby Analytics president Joe Clabby wrote a paper taking a look back at the acquisition terms, and the future of the deal.

According to Clabby, “Oracle’s acquisition of Sun needs to be reconsidered, redone, renegotiated, or rejected.” Those are some harsh words right there, but Clabby took some time to break it down. He said that given four factors — revenue losses due to European Commission regulatory delays, loss of Sun engineering and sales talent, migration away from Sun during the delay, and Oracle’s stated earnings goals — that Oracle now has four options:

1. Continue with its acquisition plans — and fight the EC (or negotiate in order to gain approval of the Sun plan). Then proceed on its path to become a hardware/software/services provider.
2. Continue with the acquisition plan — but once Sun is acquired, sell-off non-strategic Sun assets in order to meet its accretive goals.
3. Restructure (renegotiate) its acquisition deal to reflect the previously described market changes
4. Withdraw from the Sun deal altogether.

If Oracle chooses to continue with its Sun acquisition plan, Clabby Analytics would expect Oracle to provide new guidance on the effect that the Sun acquisition is now likely to have on its earnings in the near and long term. In fact, Oracle’s investors and the broader market should demand it do so. We suspect that Oracle will be hard-pressed to show that it can meet its current revenue estimates.

Clabby’s column was in the most recent edition of Pund-IT Review, a weekly collection of analyst opinions that analyst Charles King puts together.

Oracle-Sun merger likely to take some time, thanks to regulators

Though Sun shareholders may give the thumbs-up to a merger with Oracle in a meeting today, users shouldn’t expect it to be complete for months, despite Oracle’s claims and hopes.

Two weeks ago, Oracle announced that the U.S. Justice Department had issued a request for more material in its antitrust review of the merger between the two big technology companies. The request, according to Oracle, was regarding the way in which Java is licensed once Sun becomes a part of Oracle. Richard Jones, vice president of data center services for The Burton Group, said that if Oracle were to start changing the Java license, it would be “shooting itself in the foot.”

Oracle added that despite the request, it still hoped to complete the acquisition this summer. But according to a story in the Wall Street Journal, second requests from the Justice Department do not generally happen that quickly. They are measured in months, not days.

In testimony delivered in late 2007, Thomas Barnett, former head of the Justice Department’s antitrust division, said the average length of a second-request review was 154 days. A similar length of time would have Oracle receiving the Justice Department’s blessing to close the Sun acquisition no sooner than late November.

Some antitrust experts say second-request investigations can take even longer. John Harkrider, an antitrust practice co-chair at the law firm Axinn, Veltrop & Harkrider LLP, who has been retained by the Justice Department to investigate antitrust issues in the past, said he advises clients to allow for six to nine months for such reviews.

“If you move heaven and earth to comply, you should certainly be able to do it within six months,” Harkrider said.

Anti-trust regulators not giving Oracle-Sun early clearance

According to Reuters, U.S. antitrust regulators aren’t giving early clearance on Oracle’s plan to buy Sun Microsystems, due to what Oracle lawyers are calling a narrow, technical matter.

The article hinted that the problem may center around Oracle controlling Sun’s Java technology, which Oracle’s competitors like IBM rely on. But Richard Jones, vice president of data center services at The Burton Group said the way the Java licensing is written, IBM won’t have much trouble.

“And if Oracle starts changing the Java license, they shoot themselves in the foot,” Jones said. “It’s an open field day for Microsoft’s .Net if Oracle screws around with Java licensing.”

According to Jones, the antitrust regulators are taking a harder look at the acquisition because Sun employees rallied some Sun customers to file complaints to antitrust regulators on anti-competitive business practice claims.

“A lot of this has to do with the rumors coming out of Sun,” Jones said. “We’ve heard the advanced research team in StorageTek has been put on hold, and the SPARC design team has been completely canceled. You can imagine that people looking at their livelihood disappearing will take action.

“When the Department of Justice sees something like this, they take a little extra time investigating. But it’s individuals worried about their jobs, not a truly anti-competitive situation,” Jones said. “Until Hewlett-Packard bought the consulting firm EDS, IBM was the only soup-to-nuts IT provider in town. I see this acquisition as an opportunity for more competition.”

For more info, check out Jones’ predictions for Sun’s assets and customers.

Sun Microsystems scraps Rock project as Oracle ownership nears

Sun Microsystems scrapped development efforts for the 16-core “Rock” UltraSparc processor, which the company once hoped would help them compete against chips from IBM and Intel, according to the New York Times.

This news surfaces as the Oracle Corp. takeover of Sun nears. Many IT pros have expressed concerns about the future of Sun technologies under Oracle, and one could assume that this will be the first of many Sun projects and products to hit the chopping block when Oracle gets a hold of Sun.

Sun has invested more than five years and billions of dollars on the project and had hoped to use the chips in its high end systems. The Rock was supposed to start shipping in 2008, but was delayed several times due to glitches, according to the Times article. 

Sun has not verified that the Rock project has been cancelled, but this wouldn’t be the first time Sun aborted a chip after years of work and billions of dollars in research and development. Back in 2004, Sun ditched efforts for the UltraSparc V and Gemini chips and in 2006, Sun killed “Serrano” chips to focus their efforts on the Niagra and Rock chips.

Sun will come under Oracle leadership once the acquisition deal closes, sometime this summer.

Rackable acquires Silicon Graphics, takes SGI name

Rackable Systems completed its acquisition of Silicon Graphics, Inc. on Monday and oddly enough, Rackable will adopt SGI as its global name and brand, instead of the other way around.

Rackable closed the transaction to acquire the debt-ridden Silicon Graphics (SGI) for $42.5 million in cash on May 8 and the company said it will change its name to Silicon Graphics International - or SGI - but will keep the Rackable Systems product line and ticker symbol (RACK) the same.

I wonder if abandoning the Rackable brand in favor of SGI is a good idea. Sure, SGI was hugely successful in the 1980’s and is still a more recognizable brand than Rackable because of its legacy, but SGI is also a failing brand that filed Chapter 11 bankruptcy in 2006 and again in April 2009 due to unmanageable amounts of debt.

In fact, I liken SGI to the captain of the high school football team; you know the type - a leader in its time, popular, and admired by all, but 20-some years later? Balding, broke, and holding desperately to what used to be.

Maybe I’m being too critical of SGI’s brand, but others question Rackable’s decision to take the SGI name as well. SGI is “Well known, sure. But more than a bit tarnished and not descriptive of Rackable’s business,” said Illuminata Analyst Gordon Haff.

Coincidentally, Sun Microsystems Inc. was founded the same year as SGI - 1982 - and they, too, are being acquired this year, by Oracle Corp. (Oracle won’t be dropping its name for Sun Microsystems though. )

Either way, Rackable now has a much larger portfolio of high performance computing products, with SGI’s x86 cluster offerings, shared memory clustered compute products, scalable data center and storage technologies, modular data centers, data management software, HPC tools and visualization technologies.

SGI will maintain its corporate headquarters in its current Fremont, California facility, with offices around the world, and the new management team will have senior executives from Rackable Systems and the former SGI.

Intel, Oracle collaborate on cloud computing

At Oracle OpenWorld 2008 in San Francisco this week, Oracle Corp. and Intel Corp. announced that they are collaborating on ways to help companies move into cloud computing. The companies will also identify and drive standards for flexible deployment in both private and public clouds.

Customers are already running applications on shared infrastructure within their firewalls using Intel Virtualization Technology (Intel-VT) and Oracle Grid Computing technologies. Some companies are also creating private clouds for their internal applications and to have the ability to extend them to public cloud environments, according to Oracle.

To advance the use of cloud computing, Oracle and Intel plan to cooperate in the following areas:

* Efficiency – Recent collaboration between Oracle and Intel on Oracle VM and the Xen open source hypervisor with Intel VT has yielded a 17 percent performance improvement of Oracle Database running virtualized on Intel Xeon processors. Oracle and Intel will continue their joint software optimization work to achieve performance and power efficiency gains.

* Security – Oracle and Intel will work together to strengthen the security of VMs in a shared cloud environment. Both companies will continue to integrate their data encryption technologies to guarantee data privacy and security in shared public cloud environments.

* Standards – Intel and Oracle will work with other industry leaders to extend standards that enable portability of virtual machine images, such as the Open Virtual Format (OVF), and to create Web services standards for provisioning and management of cloud-based services.

This week, Oracle also announced new licensing and support for a handful of Oracle applications in Amazon EC2 cloud computing environments.

Oracle supports, licenses for Amazon EC2 cloud environments

Oracle today announced that customers can license Oracle Database 11g, Oracle Fusion Middleware and Oracle Enterprise Manager to run in a cloud computing environment.

The first products will be available for Amazon Web Services’ Elastic Compute Cloud (Amazon EC2) environment. Customers can also use their existing software licenses on Amazon EC2 with no additional license fees.

Oracle intends to expand its Cloud offering to other platforms. Support and associated time lines will be based primarily on customer demand, according to Oracle’s website.

Oracle is also offering a set of free Amazon Machine Images (AMIs) so that Oracle products can be deployed to the cloud quickly. Using Oracle provided AMIs, new virtual machines can be provisioned with Oracle Database 11g, Oracle Fusion Middleware and Oracle Enterprise Linux fully configured and ready to use within minutes. Developers can use the provisioning and automated software deployment to build applications using Oracle’s development tools such as Oracle Application Express.

Additionally, Oracle Unbreakable Linux Support and Amazon Premium support is available for Oracle Enterprise Linux on EC.

Oracle is also introducing a secure Cloud-based backup solution called Oracle Secure Backup Cloud Module, based on Oracle’s tape backup management software, Oracle Secure Backup, so customers can use the Amazon Simple Storage Service (Amazon S3) as their database backup destination.