Can Oracle successfully assimilate Sun?

Oracle’s announcement that it would acquire Sun took many industry observers by surprise. The database giant has offered little detail on how it intends to achieve the $1.5 billion in first-year operating profit that it has promised investors. While Oracle’s interest in Java and Solaris has been widely discussed and publicized, the company declined to participate in this story citing the fact that the deal is still pending approval. Even otherwise, Oracle has not been forthcoming on critical aspects of the deal, namely, the future of MySQL and what it intends to do about Sun’s hardware business. Customers, analysts and the financial community all have their own doubts at this point of time.

MySQL’s role is unclear:

Will Oracle kill MySQL or slowly fold it into its own database? Analysts and customers are asking this billion-dollar question. The fact is that Oracle will gain in the database space from owning MySQL. Sun had a huge SMB base for this product and a steady revenue stream of about 3% of its revenues accrued from this product. This is an opportunity for Oracle to garner additional revenue from the subscription license base but the company needs to position MySQL clearly in the context of its existing database offerings. MySQL will give Oracle a standing to take on Microsoft in the SMB space where the latter is strong.

Ray Wang, Vice President, Forrester Research, said, “Access to MySQL provides a key entry-point into the SMB market. If Oracle executes well, MySQL could be the icing on the cake because Oracle had struggled in penetrating the SMB database market, which is where Microsoft SQL Server has dominated for years.”

He added “MySQL has achieved high adoption [as the backend database for] small to moderately sized Web-based applications and is extensively used by universities and SMBs; therefore, killing MySQL would be a huge mistake.”

We expect Oracle to invest in MySQL in an attempt to trump Microsoft SQL Server in the SMB segment where Oracle’s flagship database has typically has been either too complex to manage and deploy or too expensive to implement. Forrester expects that Oracle will improve the product’s usability, auditing, encryption, and monitoring and create a seamless migration path from MySQL to Oracle DBMS in order to help MySQL play this vital role. If MySQL fails in the SMB market, Oracle will relegate it to the developer tool bin along with its other open source database products such as Berkeley DB and InnoDB.

Another unclear aspect is Oracle’s commitment to MySQL’s dual-licensing model (free and paid licenses).

That being said, a portfolio combining MySQL and Oracle database management systems (DBMS’) could make Oracle the most powerful database company that covers all types of applications and databases for small to large enterprises.

As every vendor purports openness, some things such as tuning, migration, and integration may work better with Oracle. Wang said, “Expect Oracle to roll out a database machine—creating a stack play. Larry Ellison has always promoted the idea of a database machine, going back to the early 1990s when he invested in a company called nCUBE. Although adoption of the nCUBE MPP database machine never took off, (largely because databases were relatively smaller in size and the cost was prohibitive), Oracle’s acquisition of Sun could change the game.”

Additionally, Oracle made a similar move last year by rolling out the HP Oracle Database Machine, a system using HP hardware and storage, which has had some success. “Oracle has already demonstrated strong engineering on operating systems, databases, and file systems, so acquiring Sun servers and storage puts a database machine well within its reach. With enterprises struggling with growing data volumes and increasing numbers of databases, the business case for a database machine becomes more compelling to lower cost, improve IT productivity, and increase performance scalability,” added Wang.


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