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The master strikes again — Quick thoughts on Oracle’s Acquisition of Sun Microsystems

April 20th, 2009 · No Comments

Oracle announced this morning that it is buying Sun Microsystems in a deal valued approximately $7.4 billion.

I’d like to offer a few quick thoughts:

  1. This is a brilliant strategic move by Larry Ellison, a master of acquiring enterprise technology companies.
  2. Oracle’s bread-and-butter is database. Its single biggest threat is the open source MySql database. With the acquisition, Oracle essentially removed its single biggest competitive threat to its database business.
  3. Now Oracle will have control over the entire technology stack from hardware server, to storage technology (e.g. via Sun’s acquisition of StorageTek a while ago), to database, to middle ware technology such as JAVA, to business applications (e.g. via  acquisition of PeopleSoft and Siebel.) They’ll be a very formidable competitor to Microsoft, IBM, and HP.
  4. There will be massive layoffs – take a look at Oracle’s acquisition records (e.g. PeopleSoft, Siebel, etc.) – they’re not shy to consolidate redundant operations and lay people off. Silicon Valley’s unemployment rate has jumped to 11%, and this acquisition will further worsen the unemployment rate in the bay area.
  5. Oracle’s enterprise sale machine will do a much better job to sell Sun’s software products. For years, Sun has been trying to get into the software business, and had limited success. Oracle is known for its aggressive sales force. I think Oracle will do a much better job to sell Sun’s software products.
  6. I’m not sure how Sun’s hardware business will do in the future – Oracle’s core competency is in software. It’d be interesting to see how they manage hardware business.
  7. What’s the future of MySql? Should Oracle spins it off and take it public? It seems strange to me that Oracle will keep MySql under the wrap and manage it as part of their database businesses. It might make sense to keep it separate, and grow it as a low-end alternative to Oracle databases.

Books on Larry Ellison and Oracle:

Tags: Company Analysis · News · Product Management

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