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Oracle to Buy Sun Microsystems

by Charles Humble on Apr 20, 2009 |

Following the collapse of talks with IBM earlier this month Oracle has stepped in to acquire Sun Microsystems for $7.4bn or $9.50 a share in an all cash transaction.  This is a substantially higher valuation than IBM’s rumored price of $6.85bn.  In a statement Oracle claims that the boards of both firms have approved the deal which is expected to complete in the summer subject to regulatory approval. Oracle CEO Larry Ellison stated:

"The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems. Oracle will be the only company that can engineer an integrated system - applications to disk - where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."

The deal offers substantial additional revenue to Oracle, according President Safra Catz:

"We expect this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing. We estimate that the acquired business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year. This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined,"

There is currently very limited information available as to what Oracle plans to do with either the hardware business the drives much of Sun’s revenue, Sun’s open source software offerings such as MySQL, GlassFish, NetBeans and JavaFX, or the Java Community Process which has been central to the way Sun has managed Java's evolution, but both Sun Chairman Scott McNealy and Sun's CEO Jonathan Schwartz have issued upbeat statements. Jonathan Schwartz has been quoted as saying:

"This is a fantastic day for Sun's customers, developers, partners and employees across the globe, joining forces with the global leader in enterprise software to drive innovation and value across every aspect of the technology marketplace," said Jonathan Schwartz, Sun's CEO, "From the Java platform touching nearly every business system on earth, powering billions of consumers on mobile handsets and consumer electronics, to the convergence of storage, networking and computing driven by the Solaris operating system and Sun's SPARC and x64 systems. Together with Oracle, we'll drive the innovation pipeline to create compelling value to our customer base and the marketplace."

Sun is the latest in a number of large scale acquisitions for Oracle.  In recent years the enterprise computing giant has also acquired Siebel, PeopleSoft and BEA Systems. If Oracle is able to sell Sun's hardware business on, perhaps to Fujitsu, Oracle will have made an important acquisition as a very low price.

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Bless by Ang Gao

Wish that the outstanding open source projects such as NetBeans, Glassfish etc from Sun will keep going on.
Bless Duke

Re: Bless by J House

I am more concerned about what this is going to mean for MySql? might be time for me to start using PostgreSql.

Re: Bless by yuanfeng xia

I think mysql will be dead.....

R.I.P. by Daniel Sobral

MySQL is dead. A fork will emerge, but I doubt it will ever have the popularity that MySQL has.

IMHO.

Re: R.I.P. by William H

MySQL is dead.

Actually I doubt this. Oracle already owns innobase, so could have inflicted huge damage on MySQL if it has any desire to do so but there would be very little point because, at the moment, MySQL has very little impact on Oracle’s sales. MySQL really competes with things like Microsoft’s Access - used for generally small Web sites, departmental servers, and single-use installations, and the like. MySQL gives Oracle a popular, basic database, with an implicit upgrade path to Oracle's proprietary product as those customers' needs grow. And should more of Oracle’s customers start moving to MySQL Oracle can still generate revenue from the process as MySQL does now.

JavaFX? Rich media? The Java plugin? by Ivan L

What do people think? Will Oracle effectively kill these too?

Re: R.I.P. by Ilya Sterin

William, are you smoking something? Just because Oracle sales folks have convinced the clueless CIOs/CTOs to buy Oracle, doesn't in any way mean Oracle is much better, at least not for the price. And to say that mysql competes with MS Access, you must work for fortune 50 or something, where you guys are locked in behind Oracle iron curtain. Open your eyes, some of the most scalable sites out there use MySQL. Scalability wise, relational databases are not scalable (horizontally) by their very nature. That's why lost of apps these days resort to either in-app partitioning and/or completely abandoning the relational model and going to more distributed data stores.

Not sure IBM had a choice due to anti-trust concerns... by Zubin Wadia

But this is good for Oracle, no question about it.

zwadia.com/?p=91

Cheers,

Zubin.

Re: R.I.P. by William H

That's all a bit personal! But yes - there are lots of reasons why Oracle is still a better database then MySQL for certain kinds of applications. For instance:

Performance: The Query optimizer is weak in MySQL generally, Subqueries are poorly optimized and there are few optimizer hints to tune query execution plans, there is only one type of join plan: nested-loop. There are no sort-merge joins or hash joins, and most queries can use only a single index.

Security is also weak – built in auditing is poor, there are no groups or roles, no ability to deny a privilege (you can only grant privileges)

The language used to write stored procedures, triggers, scheduled events, and stored functions is very limited.

DDL such as ALTER TABLE or CREATE TABLE is non-transactional - It commits open transactions and cannot be rolled back or crash-recovered. Schema is stored in the filesystem independently of the storage engine.

There are lots and lots of other limitations. But that isn't to bash MySQL – its good in many contexts and I've used it a lot (and I'm aware that Google uses it to). And that isn't to say that a database is necessarily the right solution for everything. If you are starting to hit the limitations of CAP for transactions than a transactionless system might be the way to go and possibly you wouldn't use a database for this.

But I don't think anything you've said invalidates anything that I've said. From Oracle's perspective MYSQL really isn't doing any damange to there sales. If it does than owning it limits the damage somewhat. If it doesn't well its still a revenue generator for them and they can keep it nice and separate and upsell to its customer list.

Re: R.I.P. by Thomas Anderson

many companies are not willing to spend 500k on oracle license, when they can spend fraction of money with mysql.

Re: R.I.P. by Ilya Sterin

Sorry didn't mean for it to be personal, just sort of a quick reaction, should of thought before the first comment. I'm just a bit pissed off today by the developments. Never liked Oracle. Besides their RDBMS, had a talk with their engineers about their XML DB and quickly realized that besides the fact that it was ridiculously expensive, the folks I talked to were also not terribly intelligent, to say the least.

Re: R.I.P. by William H

Sorry didn't mean for it to be personal, just sort of a quick reaction, should of thought before the first comment.


No worries. I'm not sure what I think about deal to be honest. I don't love Oracle either although I think I prefer them to IBM (who I used to work for many moons ago) and it hasn't worked out too badly from some of their other recent acquisitions. Both WebLogic and Tuxedo are doing significantly better at Oracle than they did at BEA, in terms of both investment and sales, and Tangasol seem to be pretty happy there as well so it might be OK for server-side Java. I'm less sure about ME/SE/FX though....

Re: R.I.P. by Stefan Norberg

I'm not very optimistic nor happy about this. My thoughts are here: stnor.wordpress.com/2009/04/20/oracle-kills-ope...

Jonathan Schwartz Email by William H

This looks genuine if anyone is interested. Schwartz's take on the whole thing....

From: Jonathan I. Schwartz
To: allsun@sun.com
Subject: Today's Sun/Oracle Announcement
Date: Mon, 20 Apr 2009 04:34:16 -0700 (07:34 EDT)

Today's Sun/Oracle Announcement

This is one of the toughest emails I've ever had to write.

It's also one of the most hopeful about Sun's future in the industry.

For 27 years, Sun has stood for courage, innovation, a willingness to blaze trails, to envision and engineer the future. No matter our ups and downs, we've remained committed to those ideals, and to the R&D that's allowed us to differentiate. We've committed to decade long pursuits, from the evolution of one of the world's most powerful datacenter operating systems, to one of the world's most advanced multi-core microelectronics. We've never walked away from the wholesale reinvention of business models, the redefinition of technology boundaries or the pursuit of new routes to market.

Because of the unparalleled talent at Sun, we've also fueled entire industries with our people and technologies, and fostered extraordinary companies and market successes. Our products and services have driven the discovery of new drugs, transformed social media, and created a better understanding of the world and marketplace around us. All, while we've undergone a near constant transformation in the face of a rapidly changing marketplace and global economy. We've never walked away from a challenge - or an opportunity.

So today we take another step forward in our journey, but along a different path - by announcing that this weekend, our board of directors and I approved the acquisition of Sun Microsystems by the Oracle Corporation for $9.50/share in cash. All members of the board present at the meeting to review the transaction voted for it with enthusiasm, and the transaction stands to utterly transform the marketplace - bringing together two companies with a long history of working together to create a newly unified vision of the future.

Oracle's interest in Sun is very clear - they aspire to help customers simplify the development, deployment and operation of high value business systems, from applications all the way to datacenters. By acquiring Sun, Oracle will be well positioned to help customers solve the most complex technology problems related to running a business.

To me, this proposed acquisition totally redefines the industry, resetting the competitive landscape by creating a company with great reach, expertise and innovation. A combined Oracle/Sun will be capable of cultivating one of the world's most vibrant and far reaching developer communities, accelerating the convergence of storage, networking and computing, and delivering one of the world's most powerful and complete portfolios of business and technical software.

I do not consider the announcement to be the end of the road, not by any stretch of the imagination. I believe this is the first step down a different path, one that takes us and our innovations to an even broader market, one that ensures the ubiquitous role we play in the world around us. The deal was announced today, and, after regulatory review and shareholder approval, will take some months to close - until that close occurs, however, we are a separate company, operating independently. No matter how long it takes, the world changed starting today.

But it's important to note it's not the acquisition that's changing the world - it's the people that fuel both companies. Having spent a considerable amount of time talking to Oracle, let me assure you they are single minded in their focus on the one asset that doesn't appear in our financial statements: our people. That's their highest priority - creating an inviting and compelling environment in which our brightest minds can continue to invent and deliver the future.

Thank you for everything you've done over the years, and for everything you will do in the future to carry the business forward. I'm incredibly proud of this company and what we've accomplished together.

Details will be forthcoming as we work together on the integration planning process.

Jonathan

Re: Jonathan Schwartz Email by Floyd Marinescu

Very interesting, I wonder if Oracle now owning Java IP is going to mean that they will finally work with IBM to change Java's open source licensing. I also wonder what this will mean for the JCP. I'm quite speachless!

Re: Jonathan Schwartz Email by John Harby

We've all heard the stories depicting Ellison as ruthless. Suppose he decides that capturing the JBoss market share would bring in quite a bit of revenue. Are there tactics he can now use to destroy JBoss now that Oracle has Java?

Re: R.I.P. by Dejan Krsmanović

Here is FAQ from Oracle site about this acquisition www.oracle.com/sun/sun-faq.pdf


What does Oracle plan to do with MySQL?
MySQL will be an addition to Oracle’s existing suite of database products, which already includes Oracle Database 11g, TimesTen, Berkeley DB open source database, and the open source transactional storage engine, InnoDB.

Re: Jonathan Schwartz Email by Joseph Schmidt

We've all heard the stories depicting Ellison as ruthless. ...

Exactly. His decisions are by no means technology oriented, but ego driven + profit (for him et co.).
I don't think the Java communities "health" is of *any* concern to him (like it was to SUN - or at least to the many SUN engineers). So even if Java won't disappear,
it won't be for sure that what we hoped it will still be.
There a funny post how will future Java releases look like under Oracle (post in German):
tinyurl.com/java-oracle

After so many good years, maybe it's time to look for a new language/platform?

Re: Jonathan Schwartz Email by John Harby

I found this article where a paragraph states:

"Perhaps more important, Oracle would hold more sway over a foundation of much of the world's business software. Owning Java gives Oracle more components of the software "stack" that companies use to create applications, including the programming language, Java middleware, and Oracle's market-leading database. The combination would give Oracle's salespeople more ammunition against Microsoft. And while much of IBM's software is currently based on Java, Oracle could impose restrictions on its rival's use of the language in future products, says Forrester Research (FORR) analyst James Staten."

This sort of thing would concern me if I were IBM, JBoss or some other large Java dependent vendor. We like to think the JCP is an open organization and indeed, anyone can join but legally Sun seems to have quite a bit of control there. Sun has been somewhat benevolent to this point (if you look at financial information shareholders have actually been criticizing Sun management for giving away too much), but who knows what Oracle will do.

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