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Oracles aggressive expansion

Michael Warrilow | April 21, 2009
Forecast of sharp reductions in Sun's workforce and operating costs

Oracle continues to aggressively expand in order to become a 'one stop shop' for enterprise-scale organisations. Through the acquisition of Sun, Oracle's stack now encompasses both application and middleware software as well as servers and storage.

Hydrasight notes that Oracle has been positioning itself to go head-to-head against yesterdays IBM and todays Microsoft. Its recent strategy to 'surround' SAP, rather than attack it head-on, has proven to be successful and has staved-off the continued expansion of SAP in large enterprise accounts. Oracle now continues to expand its largely traditional approach to enterprise software by announcing its intention to acquire Sun Microsystems.

While this obviously creates a new vertically integrated (or at least vertically oriented) enterprise IT vendor supporting both software and hardware solutions, Oracles move fails to recognise major trends in the IT industry, at least on the face of it. Both Microsoft and IBM have been preparing for the future of enterprise computing with its greater emphasis on off-premise and service-centric computing. EMC/VMware has also driven much of the pragmatic change with support and a strong vision for server virtualisation. This evolution has created more market interest and stronger viability for the development of enterprise cloud computing.

In cloud denial

Put simply, we note that Oracle's most recent acquisition highlights that it is still focused on supporting the complex, internal client/server and n-tier style of enterprise IT environments and that it remains largely in 'cloud denial' at this time.

We also note Oracle's aggressive (perhaps optimistic) ambitions to drive greater profitability from Sun while rapidly integrating it into their stack. We believe Oracle expects unrealistic and unachievable improvements in Sun's profitability over a short period of time and in a period of global economic downturn. Oracle will only be likely to achieve its objectives through aggressive and brutal reductions in Sun's workforce and operating costs.

Given that both companies operate at a global level, we expect to see such reductions occur equally in Asia Pacific as elsewhere. Moreover, both Sun and Oracle remain focused on large, complex organisations at a global level and therefore domestic and/or regional support for smaller organisations are less likely to find Oracles solutions attractive. Nonetheless, Oracles substantial revenue base combined with the remaining assets of Sun will enable it to market itself as a strong supporter of mid-sized organisations for the immediate and mid term.  

Superficial integration

In contrast to Oracle's marketing, our research shows that Oracle's efforts at integration remain largely superficial at this time. This is evidenced by the slow and uncertain path to Fusion [refer to The sum of Oracle's parts are more than a compelling Fusion here and below] [refer to Oracle's application Fusionattractive but often irrelevant here and below] to say nothing of the challenges of integrating previous acquisitions such as BEA [refer to How Oracle's acquisition of BEA will cause (con)Fusion here and below].


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