The intended US$7.4 billion acquisition of Sun Microsystems Corp. by Oracle Corp. brings to the fore industry speculation over the fate of Sun’s software initiatives including Java, open source, Solaris, and Rich Internet Applications.
Oracle is already heavily invested in Java, and it’s expected that, post-acquisition, that will continue. The question, however, is what will happen to specific products like Sun’s middleware stack, Glassfish, and others, said Dave Senf, director of research for Canadian security and infrastructure software with Toronto-based IDC Canada Ltd.“We expect them to be rolled into Oracle products so we won’t know if that product line has fully disappeared or has just been rolled in, because there is a lot of overlap between what Sun has and what Oracle has,” said Senf.
Julie Craig, research director for application management with Boulder, Colo.-based Enterprise Management Associates Inc. hopes that Oracle plans to keep Java in the open source domain, but wouldn’t be surprised if it created fee-based Java extensions. The fact that Oracle considers Java to be one of the most important software acquisitions it has made, said Craig, “I would wonder where they are going to get the value of it the way it stands right now.”
Craig thinks that if Oracle is to create fee-based Java extensions, then it will most likely be in the Rich Internet Application (RIA) space, considering Java is the basis for countless applications including those that are Web-based. That said, there remains ample development to be done in that area, said Craig, in light of more appealing offerings from Adobe Systems Inc. and Microsoft Corp.
Senf foresees, post-acquisition, investment in RIA in order to provide the underlying infrastructure to support Web 2.0 initiatives from companies like Google Inc. “Where it helps to evangelize Oracle’s position as a Web 2.0 cloud computing company, they would support something like JavaFX, but it’s not going to be a large revenue generator for them,” said Senf.
As for Sun’s heavy efforts in the open source community, such as the MySQL database firm it bought last year, Craig thinks there probably is a plan for the open source database, but the bigger issue are potential anti-trust hurdles given it competes directly with Oracle’s database offering. “It’s interesting to see what happens during the regulatory review,” said Craig, but she added, if history repeats itself, then “it won’t be problem with (Larry) Ellison.”
Nigel Wallis, research manager for the application services sector with IDC Canada agreed that it should be interesting to see how Sun CEO Jonathan Schwartz’s strong advocacy of open source continues. Wallis said MySQL “has been a pain in the neck to the other database players” given it lowers margins. That said, Oracle’s database and Sun’s MySQL do play in slightly different markets: the former designed for mission-critical applications like ERPs and datawarehouses, and the latter for small-to-medium sized businesses. Wallis said Oracle could use MySQL to crack the SMB space, or the open source database could undergo fragmentation if the community is unhappy with Oracle’s stewardship.
In recognition of the Solaris operating system as its “bread and butter,” Senf said Oracle will absolutely continue investment in that area as “it must ensure it maintains the revenue stream within those organizations.”
Dan Kusnetzky, principal of Osprey, Florida-based Kusnetzky Group LLC., said one question that arises is the degree of consolidation between both portfolios. “Will the combined company maintain that entire portfolio or will some be dropped?” asked Kusnetzky. “Customers stand to get hurt if major changes are made.”
Both companies, continued Kusnetzky, offer virtual machine software, clustering software, operating software, storage virtualization, management software, and development tools.
While there are potential synergies between Oracle and Sun, Kusnetzky noted that there also exists potential conflicts between the two companies and Oracle’s other hardware partners. “Will IBM, HP or other partners be as open to work with and sell Oracle software when it could mean bringing another hardware company into an account?” he asked.
Senf doesn’t see much “meaningful overlap” between both companies. But he added there will, nonetheless, be a lot to digest moving forward, like the differences in business metrics for hardware manufacturing and software development. The integration, said Senf, will be “very complementary but very complex.”
The deal is expected to close this summer, pending Sun stockholder and regulatory approvals.
