Global CIO Top 10 Stories: Oracle Buys Sun For Systems Push - InformationWeek

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12/2/2010
07:10 PM
Bob Evans
Bob Evans
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Global CIO Top 10 Stories: Oracle Buys Sun For Systems Push

More than a simple linear takeover, Oracle-Sun has accelerated some widespread transformations in the IT business—can Larry Ellison take full advantage?

Exadata And Optimized Systems: "We think the Exadata business is going to be huge—by huge, billions of dollars a year in new systems sales, not including the maintenance on those businesses. Now how long it takes us to get there remains to be seen but our overall view of the computer industry is we have been selling components to large customers and the customers have been hiring systems integrators to glue those components into complete systems." And here's his "overall strategy going forward":

"Our overall strategy right now going forward is not to sell those individual industry-standard components on their own but rather group them together into machines like Exadata, where we have processors, networking, storage, storage software, database software, our Oracle Enterprise Linux operating system—all as a complete database machine for both transaction processing and data warehousing. We think that makes it much easier for the customer—they don't have to buy all the individual parts and glue them together—but instead they buy the boxes: a high-margin product for us and a high-value purchase for them because they don't have to spend a lot of money on systems integration. "We think that's the way customers are gonna go forward as they build their data centers: not buying components but buying systems like Exadata. And one of the big reasons we bought Sun is that we want to apply that same strategy to middleware, to applications, to the operating system itself: we're not gonna sell operating systems just for an individual computer, but we're gonna sell the next generation of Solaris that's gonna be a Cloud Edition of Solaris, where it manages a group, a cloud, a cluster of these computers that we sell together as a unit.

"That's highly differentiated: high-margin for us, and no systems integration for the customer. How big is that business? We think that's what the computer business is gonna look like for the largest customers going forward, so we think that's billions and billions of dollars. That is our business in the future." (End of excerpt.)

Ellison spoke in detail about his desire to exploit Sun's high-end engineering prowess rather than try to slug it out at the lower end of the market—and please note how he describes that Sun's technology provides the opening for Oracle to become a full-fledged player in the cloud-computing market:

"Since we're getting closer to closing the Sun deal, I'm going to talk a little bit about our strategy with Sun going forward: what we're not gonna do and what we are gonna do. One thing we recognize is that Sun does not really now and is never likely to have the volume to compete in the high-volume, low-margin business selling an Intel server with Windows on it or Linux on it one at a time. We think that high-volume, low-margin business is a good business, so long as you have high volume, and that's something Dell and HP are very good at and we're gonna avoid that business.

"Instead, we are pursuing the high-value, high-performance market:

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