Oracle is making a big bet that CIOs want integrated software stacks optimized to run on an appliance, and that they'll pay a premium to get greater ease of use. If so, it's a way for Oracle to sell both its middleware and application software along with its recently acquired Sun Microsystems UltraSparc hardware.

But the appliances will face stiff competition from other alternatives for delivering enterprise applications. Instead of opting for UltraSparc hardware, some IT departments will build their own software appliances--a combination of an application with its operating system--using the hardware of their choice. Frequently, they will run as virtual machines on the increasingly competitive x86 server architecture from Intel and AMD.

Oracle's hardware appliances would seem to have few advantages over virtualized software appliances running on systems from Hewlett-Packard, Dell, or IBM. Virtualized appliances might lend themselves to a converged server and network fabric, such as Cisco's Unified Computing Systems, or other offerings from hardware vendors optimized for virtualization. This approach stacks up many virtual machines per hardware server, with I/O flowing off the physical server into the network fabric. This convergence allows devices in the fabric to divide the converged traffic into its respective storage and networking parts.

Oracle will also be competing with CRM, human resources, and other enterprise applications available as a service, from suppliers such as Salesforce.com, SuccessFactors, Workday, and perhaps even SAP and Oracle itself. If IT really wants simplicity, software as a service offers advantages over the promised Oracle appliances: The vendor is responsible for both reliable service delivery and low front-end pricing.

Data Shows Skepticism

Just over half of the 381 business technology pros we surveyed shortly after the deal closed on Jan. 27 think their companies will see no benefit from Oracle's acquisition of Sun. Even among customers of both Oracle and Sun, 42% think there will be no benefit.

But Oracle doesn't want every customer. It's gunning mostly for the biggest and most sophisticated ones with its Oracle-Sun combinations, so a small percentage expressing interest in its appliances may be all it needs.

Oracle already sells database appliances based on UltraSparc servers, and 13% of Oracle customers in our survey prefer to buy a database system that way; 16% of existing Sun customers do, and 14% of customers who use both Oracle and Sun do. Only 7% of those who are neither Oracle nor Sun customers say they would buy such an appliance.

The numbers drop off for individual applications on combined UltraSparc hardware/Oracle software. For financial apps, which require a spike in computing capacity with each quarterly close of the books, 10% of Oracle customers, 9% of Sun customers, and 6% of Oracle-plus-Sun customers would prefer them on an appliance. Sixty percent of Oracle customers say they prefer to buy financial apps as standalone software to run on their choice of hardware.

In segments such as CRM where there's a viable SaaS option, Oracle has a tough row to hoe: Only 5% of Oracle customers want a CRM hardware appliance; 17% want CRM as an online service. (Oracle does offer one.)

Oracle's reputation as a high-price, high-performance vendor precedes it in any market. Michael Schultheiss, a Unix systems administrator at Indiana University, says his shop would consider one of the Oracle appliances, but "the price point would have a lot to do with whether we would purchase an entire stack from Oracle." But he adds what should be a warning to Oracle: "We've done a lot of migration from traditional Unix to Linux on x86. I can only imagine that would continue."