Oracle buys Sun; Now owns Java; Becomes a hardware player

Oracle said Monday that it will buy Sun Microsystems for $9.50 a share in cash, or about $5.6 billion excluding debt, in a deal that plunges Larry Ellison & Co. into the hardware market. The company added that the acquisition of Java “is the most important software Oracle has ever acquired.”

With the move- valued at $7.4 billion including Sun’s debt – Oracle also becomes a full-fledged hardware player. Oracle has been dabbling with the storage appliance with HP, but the acquisition of Sun puts the company in an entirely different realm. Oracle and Sun have been long-time partners.

On a conference call with analysts, Ellison said that Oracle’s acquisitions to date have been market leaders – PeopleSoft, Hyperion and Siebel. With Sun, Oracle said Java and Solaris are the keepers in the deal.

So what does Oracle really want with Sun?

If you subscribe to the art of war approach to the tech sector, Ellison’s move to buy Sun makes a lot of sense. To wit:

  • Oracle gets to annoy IBM—and own Java—over a few pennies a share more than Big Blue was willing to pay.
  • Oracle gets to kill MySQL. There’s no way Ellison will let that open source database mess with the margins of his database. MySQL at best will wither from neglect. In any case, MySQL is MyToast.
  • Sun has a big installed base. All the better to upsell applications into. 
  • Oracle’s database runs on Solaris systems. Oracle fine tunes the systems, charges a premium and ditches the low-margin hardware. 
  • And speaking of hardware. Sun’s manufacturing is outsourced so there isn’t a lot of baggage—real estate, equipment and labor—to worry about. If Oracle decides to milk then wind down the hardware business it’s relatively easy. 

Read full story at ZDNet.com

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About Jaggi
love technology, always updated on the latest and current happenings, seminars, tech.Ed, virtual days! Be Yourself!

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