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Oracle's Alternatives Dim Without Sun

By becoming a systems vendor, Oracle will move from being a software company to one that packages solutions "from database to disk."

Knowing what to do with the open source MySQL database "may be a challenge" for Oracle, he said. Sun paid $1 billion for MySQL AB in early 2008, then watched as founders David Axmark and Michael "Monty" Widenius and CEO Marten Mickos, the core MySQL brain trust, left the company. Oracle may continue to host MySQL development as a way to increase the number of relational database users, and build an Oracle software stack that includes MySQL with some of its Java middleware, as a low-end bid for developers to get involved with its software, Chin suggested.

Oracle has previously ingested open source databases InnoDB and BerkeleyDB as embeddable systems and complements to the existing Oracle product line. The two remain open source code inside of Oracle. MySQL, however, competes more directly as a relational system suitable for new Web-oriented applications, since it excels at serving Web pages fast. MySQL and other open source databases were working at becoming more direct Oracle competitors. EnterpriseDB, based on the open source PostgreSQL system, claims it can migrate Oracle customer to its system.

Oracle can't literally kill off MySQL by buying Sun. Its large body of developers and users -- Sun claims there are 2 million of them, although only a small portion pay Sun for MySQL support -- would be likely to fork the code and start a project that sustains the open source version of the database. So Oracle is likely to proceed with caution, viewing the MySQL community as a potential source of new customers for some of its software, if not its commercial database.

Oracle would be delighted to let MySQL customers continue to use their favorite database if there were some way to convert a small percentage of them each year to its Fusion middleware suite. Middleware is the company's "fastest-growing business," said Ellison. The acquisition of Sun will introduce a new set of Java middleware, in a few instances adding new products and in many adding duplicates that Oracle is likely to weed out. Ellison said middleware, a key building block of its applications business, is destined to be as big a revenue generator as Oracle's database business.

Regardless of the outcome, Sun has finally found a way to rationalize its high operating expenses in a downturn: be acquired by an organization capable of swift layoffs and ruthless R&D cost cutting. Both are likely to result in what one analyst firm termed "a major bloodletting" as heads rolls and reductions in force occur.

Oracle will drive operational efficiencies that "Sun never had the courage to enact," Technology Business Research analyst Stuart Williams wrote Monday.

"Oracle will lay off between 10,000 and 15,000 Sun employees and gain annual savings of $1.5 billion in operating expense in year one and over $2 billion in the second year," he predicted. But that outcome was somewhat predictable before Oracle surfaced as a buyer, said Chin. "Sun was struggling" going into the economic downturn when it began talks with IBM. No one else was interested in Sun at the time, IBM spokesmen said, giving Sun a take-it-or-leave-it ultimatum. But the thought of IBM owning Sun must have forced a realization at Oracle of how much its own future is focused solely on Java. It's converting Siebel, PeopleSoft, and JD Edwards applications into a new Java application suite with which it hopes to best SAP in the marketplace.

If Sun had to sell itself to the highest bidder, which after IBM might have become anyone willing to bid, than Oracle would have been left in the uncomfortable position of needing to buy a Java license from a powerful competitor. Perhaps buying Sun, with its sprawling product lines, looked like the better alternative.

Each year, InformationWeek honors the nation's 500 most innovative users of business technology. Companies with $250 million or more in revenue are invited to apply for the 2009 InformationWeek 500 before May 1.

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