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Oracle Outlines Post Merger Roadmap

Oracle CEO Larry Ellison said Sun Microsystems will add $1.5 billion to Oracle's profitability within a year of the just-completed merger of the two companies.

Now that Oracle has finalized its $7.4-billion acquisition of Sun Microsystems, it is reassuring Sun customers that they can rely on the newly combined entity to support their UltraSparc- and Solaris-based systems--and a lot more, if they're willing to buy integrated hardware/software packages.

Oracle will add stacks of software, including its 11g database, Oracle business applications and Fusion middleware, to UltraSparc servers along with the operating system. Customers can get virtualization software from Oracle as well in the form of Oracle VM and Oracle Enterprise Management. All the pieces will be certified to work together and optimized for maximum performance.

"Our vision for 2010 is the same as IBM's in the 1960s," said Oracle CEO Larry Ellison as he closed out five hours of briefings Wednesday at Oracle headquarters in Redwood Shores, Calif. He noted that IBM integrated hardware with software and sold the combination as the mainframe, which became the centerpiece of the data center.

"We like that strategy a lot and we're going to adopt it," Ellison added.

An early example is the Exadata database machine, a blade server cluster with Flash memory and storage in a single box. Oracle produced the machine with Sun hardware shortly after acquisition plans were announced April 20.

Despite the focus on combined hardware/software products, Ellison took pains to emphasize that Oracle will continue to sell separate products. "That doesn't mean we're getting out of the component business. Our goal is to build the best of breed componentsand we're going to integrate those components together" into hardware appliances.

"We can deliver better integration than IBM," Ellison added.

IBM was a name which came up frequently in Ellison's talk. A key difference between what IBM did with the mainframe and Oracle's current product plans are Oracle products will be built to public standards, such as the Java programming language, he added.

Oracle 's R&D spending in fiscal 2011, already underway, will be $4.3 billion or nearly triple the amount that it spent in 2004, the year it initiated the PeopleSoft hostile takeover. It has executed 60 acquisitions since then and built out a massive application and middleware product list. No other company can offer all the product lines that Oracle can, Ellison said. And no other company can integrate an end-to-end set of products, from the applications to the disk and tape drives, he added.

In his opening talk, Oracle President Charles Phillips cited the Exadata machine as an example of how Oracle will "re-energize assets at Sun. Oracle brings instant credibility back to Sun's superior products," Phillips said. "We want to transform the industry."

One way it plans to do so is to build in more diagnostics and event reporting in its hardware/software appliances. In some cases, telemetry will report from the customer site back to Oracle support centers, where technicians will examine customer configurations and advise them if something appears wrong.

"We will monitor customer systems and proactively give recommendations," said Thomas Kurian, executive VP of Oracle middleware.

One way Oracle thinks complicated hardware and software combinations can be made profitable is through a reduction in system faults and breakdowns. If it configures a software stack and monitors how the customer uses it, Oracle thinks the combination will encounter fewer support issues.

Customers will see less downtime, a win/win situation for both parties, it hopes. Customers often incur support problems when a system administrator changes a configuration without realizing the impact it will have, so change management will be a key ingredient of Oracle's new approach to support.

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