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May - 2009 - issue > Tech Tracker
Oracle-Outsmarts-IBM,-Acquires-Sun-Microsystems
Eureka Bharali
Saturday, May 2, 2009
The software bellwether Oracle dived into the unprecedented zone of hardware with the acquisition of the beleaguered hardware giant Sun Microsystems. The deal gives them credibility with hardware, virtualization, open source, storage, and cloud computing. Sun turned down the multinational firm IBM’s offer as it was not content with the acquisition price and accepted the $7.4 billion or $9.50 per share offer of Oracle, which would be completed by this summer.

Lawrence J. Ellison, Oracle’s CEO maintained that Sun’s Java and its Solaris operating system were the main attractions. The acquisition of the Java platform would prove to be a hard fact for Oracle’s biggest competitor SAP, most of the works of whom are based on Java. With the deal, the software giant would also be a fully accredited virtualization vendor and compete with its former partner VMware.

The acquisition of Sun comes as a huge shock to Oracle’s rivals like Microsoft and IBM. Sun’s MySQL currently enjoys 25 percent of share in the enterprise database market, which if added to Oracle’s 44 percent share, would threaten the existence of both Microsoft and IBM in the area. Realizing the threat, IBM has adopted technology from a small database company EnterpriseDB to make it easier for its database platform DB2 users to migrate away from the Oracle database system. The only beneficiaries will be the new entrants like Cisco Systems in the virtualization sector and Tibco in the database platform, as customers will be looking for alternative suppliers in the Oracle dominated market.

There are speculations on the success of software-centric Oracle with Sun’s hardware business. The sudden plunge into hardware may prove difficult for the company that has no prior experience in the field, except a deal with Hewlett-Packard (HP) last year to produce servers designed to boost Oracle databases. The acquisition of Sun, the fourth largest firm in the server market, will bring Oracle into direct competition with the other server market leaders like HP, IBM, and Dell. The competition remains till it is able to rejuvenate the server business, which has drastically declined under Sun.
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