Monday, April 20, 2009

Brilliant idea

Oracle buys Sun, this is a brilliant tactical and strategic business move by Oracle and they should be commended for it.

NEW YORK – Information technology company Oracle Corp. said Monday it is buying Sun Microsystems Inc. in a cash deal the company valued at $7.4 billion after IBM abandoned its bid to buy the networking equipment maker.

For the storage business it will be an interesting few years as HP and Oracle have a partnership and Oracle runs on EMC, Hitachi, IBM and NetApp. But Oracle has been able to solve these contradictions in its business before and they continue to grow. Strategically, it would seem that Oracle will have to marginalize its hardware partners over the next few years to rationalize the purchase of SUN. I expect to see them do it.

This may be a precursor to other OS and DB companies buying major hardware manufacturers. Creating proprietary hardware and software solutions is the best way to lock clients into your solution long term. In tough economic times I expect we will see more companies try to lock in their customers this way.

Update
"Right now, it looks like Oracle is going to stay in the hardware game, meaning they're going to be competing with their biggest partners," said Brian Babineau, senior analyst at Milford, Mass.-based Enterprise Strategy Group (ESG). "EMC and NetApp are going to have to work even harder to convince customers that an integrated application stack isn't the way to go."

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