Monday, April 20, 2009

Sun & Oracle : Over to Cloud Computing Then?

Oracle has made the announcement to acquire Sun, for $7.4 billion dollars in Cash. This is a bit of news. Obviously what dominated the tech circles for last few weeks is the possibility of a Sun-IBM merger, which made sense technology-wise. Till Sun turned IBM down, it looked like a done deal, and it is now emerging why Sun was so confident in the first place.

Hopefully, this deal will go through. After the two failed headline mergers, that of Microsoft and Yahoo and of Sun and IBM, one would wait to see this through before making any noises. But, the two companies seem better fit than the other pairs here. Sun and Oracle worked side by side in many projects, and I am sure they are defined the common enemy above everything else. Besides, Oracle and Larry Ellison seem particularly adept at pulling through successful mergers. Oracle has managed to pull through a particularly bitter acquisition battle with Peoplesoft, and followed this up with a successful acquisition of Siebel, both of which sounded difficult given the competing nature of the companies.

There is already speculation in the media circles whether the Oracle Sun merger will mean the final integration of Hardware and Software, where the software of enterprise scale will finally come bundled with truely integrated hardware and operating system. An old dream, like the Hot Iron, when these two companies tried to work together with others to create a similar solution.

But this is so dated already. Today's day and age is not really about integration, it is about independence: software unrelated to hardware. In fact, I was reading about the new policy at companies like Cisco and Dell which allow their employees to choose their own work machine, because technologies like Virtualization allows everyone to use similar software, regardless of their workstations. So, would the things like Cloud computing at a grander scale. We almost know that Oracle looks at the success of salesforce.com with concern, and wants to get there. Google is aggressively positioning itself for Cloud Computing and so did Microsoft when it tried to gobble Yahoo!.

I think this is the subtext of this Oracle/Sun marriage - it is not about integration, but about independence of hardware and software, and the final letting go of software. Microsoft-Yahoo could have delivered this, but this is it then. Sun has many interesting technology properties, but like all marriages, only the two knows what's most alluring. And, like all those poor curious souls, we must take a guess - my vote will go to Java and the open technologies Sun has in store but could not take it forward. It may even be Linux, a neighbouring property, which both Sun and Oracle had played with, and it may emerge to become the point of focus.

I say this because I think there are enormous risks for Oracle in this acquisition, and they come from Sun's hardware. Oracle has built a tight relationship with numerous hardware vendors, including IBM and Dell, to promote its enterprise software solutions. It will indeed be challenge for Oracle to become a competitor to these guys as well as depend on them to sell the software.

So, exciting times ahead then! This merger looks easier to put through the regulators than IBM-Sun, and then there is extraordinary skills of Larry Ellison to pull through complicated mergers. The interesting thing is that this acquisition actually may push desktop PC software more towards extinction - have we not said that many times already - and tilt the balance towards cloud computing, virtual work-spaces and light, mobile computing.

Wait and watch for rest of us then.

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