What Could the Oracle-Sun Deal Mean for the Database Market?

On Monday, a major shakeup occurred in the software and database markets when Oracle agreed to buy Sun Microsystems for $9.50 per share, with an estimated value of $7.4 billion. IBM had been courting Sun for the past few months, but those discussions died on the vine. Most analysts suggest that price wasn’t the deciding factor as Sun chose a suitor. Instead, it’s perceived that there was less overlap with Oracle’s products than with IBM’s products. Still, the acquisition took some people by surprise.

"The last thing you expected was a database-software company to buy a hardware customer base," says Bruce Richardson, an analyst at AMR Research in Boston. "It's shocking."

So why did Oracle make the plunge? If Oracle can digest the Sun acquisition, it will be arguably the most well rounded one-stop shopping option on the market. Buying Sun gives Oracle Java, a dominant application development environment, in addition to a robust OS and hardware business.

What does this acquisition mean for the Microsoft world? Well a lot depends on what Oracle decides to do with Sun and Solaris. There’s already speculation that Oracle will optimize Solaris and Oracle in situations where Oracle is running on Solaris. But what would that lead to? Sun had a healthy spectrum of hardware ISV’s writing code and offerings for both the Unix and Windows world. Look at a company like HP. Will it feel threatened by Oracle being tempted to optimize its flagship database product for Solaris? I suspect it all depends on how aggressively Sun pursues an integration strategy between Oracle and Solaris.

"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," says Oracle CEO Larry Ellison.

That statement is largely true because no other major vendor owns disk, hardware, application, OS, and database offerings that can be integrated together. Now that Oracle owns MySQL, as a result of its acquisition of Sun, how will it orchestrate a strategy that integrates a free open-source database product with its core Oracle database offering? Only time will tell.

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