Ballmer befuddled, SMB market watchers buoyant about Oracle-Sun merger

The news may have befuddled Microsoft CEO Steve Ballmer and blindsided IBM, but Oracle Corp.’s decision to acquire Sun Microsystems for US$7.4 billion has been mostly welcomed by SMB market watchers in Canada.

It bodes well for the tech industry in general, according to James Alexander, senior vice-president, partner eco-systems at Info-Tech Research in London, Ont.

“And specifically, it’s very significant for small and mid-sized businesses (SMBs),” he said.

 

IT World Canada Video – Oracle’s proposed acquisition of Sun

“At least in a couple of ways.”

First off, Alexander noted that many midmarket firms run their business on Sun systems.

Were Big Blue successful in its bid to buy Sun, one of its first steps would be to phase out a huge chunk of Sun’s hardware, he said. “At least with an Oracle purchase those parts will continue to be supported … so from that perspective it’s good news.”

SMBs are also likely to be affected by MySQL database becoming part of the Oracle portfolio, he said. But the exact nature of that impact isn’t entirely clear right now.

MySQL – fate unknown

With more than 11 million installations, MySQL has been dubbed as “the world’s most popular open source database.” It was developed by Swedish company MySQL AB, acquired by Sun in January 2008.

While after this acquisition, the open source character of MySQL remained intact, its fate as part of the Oracle portfolio is uncertain. 

“It remains to be seen whether Oracle will retain it as free, open source software,” said Alexander.

At a bare minimum, he said, Oracle will probably write hooks into MySQL from its own applications.

“And perhaps they will have a slimmed-down free version, with extensions you can buy from them … so they can have a foot in each camp.”

MySQL’s much touted ability to reduce database total cost ownership (TCO) is one reason for its runaway success, especially in the small and mid-sized market.

Success stories have widely circulated of SMBs – such as Pivex, NetQoS and Friendster.com – using MySQL to boost database reliability and performance, and reduce costs – at times by as much as 90 per cent.

It’s clear that MySQL’s fate under Oracle will be of great interest to many SMBs, Alexander said. 

“Leaving a core version of it free and open source, and then building in extensions they can bill for … that’s going to be the most likely strategy.”

Up until now, he said, Oracle has tried hard to appeal to the open source community. “So I think they’ll be loathe, as their first move, to jettison open source or the free version of MySQL.”

Besides, Oracle’s core database product doesn’t really compete in the same space as MySQL, Alexander said.

At any rate, open source database vs. Oracle database could turn out to be one of the banner issues of the Oracle-Sun merger, another analyst noted.

“It’s certainly going to be a tough call for Oracle — whether or not to continue along the path of driving database open source middleware,” said Vito Mabrucco, senior vice-president, worldwide consulting at analyst firm IDC Canada in Toronto.

Potential conflicts between Sun’s open source strategy and Oracle’s database products – the core of its profitability – would need to be resolved, he said.

Boost to Accelerate

The strengthening and expansion of the Oracle Accelerate program is another likely benefit of Sun acquisition, Mabrucco says.

Through the program Oracle – working systems integrators and VAR partners in the Oracle PartnerNetwork – seeks to bring pre-configured, easy to deploy, industry-focused applications to small and mid-sized businesses.

At the heart of the Accelerate approach is the availability of pre-packaged application bundles that can be quickly implemented by partners — sometimes within weeks.

“If Oracle could extend [the Accelerate program] to include and go down all the way to the hardware … that would be of great value to the mid-market,” Mabrucco noted.

Much like Oracle, and perhaps even more so, Sun is also strong in the partner community, he said.

Sun’s alliances with systems integrators, such as Crofton, MD-based Force 3,  have helped create and deliver a broad range of security, data centre, virtualization and other types of customized systems for the mid-market.

“You combine those two (Oracle and Sun) – and there will be even more opportunities for the partner community to provide value to their customers by integrating all pieces of the stack.”

Other Canadian analysts are also optimistic about potential synergies unleashed by the merger.

The Sun acquisition, said Info-Tech’s Alexander, will help Oracle deliver comprehensive offerings for the mid-market – not just on the apps side, but also on the infrastructure side. “Clearly that’s the play for Oracle.”

It’s a view echoed by Paul Edwards, director SMB and channels with IDC Canada.

With the Sun buy, he said, Oracle would have the business applications, database — and the hardware to support these. “I can’t think of any other vendor [with] this combination.”

Edwards said there’s definitely greater scope for Oracle to optimize its software on Sun hardware in a way that would speed up deployment for SMBs.

They need to get to the point where mid-sized customers don’t need to do a whole lot of configuration to have the Oracle apps work.

Not all observers are as sanguine about the impact of the acquisition on SMBs, though.

This market isn’t likely to get more access to Oracle products following the merger, according to Michael Rooney, executive vice-president of Ringmaster Software, an Oracle partner based in Burlington, VT.

Ringmaster works with a variety of verticals, tweaking Oracle E-Business Suite applications to meet compliance regulations.

E-Business Suite can’t really be optimized in any special way for Sun hardware or Solaris, Rooney said. That “would certainly annoy other customers [of the Suite] who would want the same performance improvements.”

He said with so many E-Business Suite customers on HP and IBM systems, Oracle would be foolish to favour Sun hardware.

“Perhaps Java is the big reason” for Oracle purchasing Sun, he said. Apart from that he can’t see how such an acquisition would be in Oracle’s best interests. “It eludes me completely.”

Rooney said it would have made a lot more sense were IBM to have bought Sun.

IBM was contacted for comment but declined.

Will Sun continue to shine on Cloud?

From an SMB standpoint, there has also been much speculation about what a merger with Oracle will do to Sun’s Cloud computing initiatives in areas such as:

  • Platform – Sun’s work with startups to build out an open system connecting a variety of clouds. For instance, Sun had tied up with RightScale and Zmanda to offer cloud services and management for its cloud and others.
  • Software: Sun had deals to provide its software inside other clouds, such as Amazon’s EC2.

If a developer keeps using Solaris, no matter which cloud they are using, it’s a win for Sun, noted the GigaOM Network, an online news site dedicated to analysis of the emerging technology marketplace.

“It’s also a win for the infrastructure providers who get access to Solaris … customers who might have not used their service otherwise.”

Many analysts say such cloud ventures are likely to continue post acquisition.

“Clearly, if you’re Oracle you would want to [benefit from] Sun’s cloud computing initiatives,” Alexander said. “And you you’ll also own Java, which is a key enabling technology for linking enterprise apps to the cloud.”

And these cloud initiatives will be another opportunity for Oracle to reach out to wider swathes of the SMB market, according to IDC’s Edwards. “That’s because the technology does offer a better delivery mechanism for the software.”

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