As Oracle prepares its USD $7.4bn acquistion of Sun Microsystem, figures have emerged about the server and software maker’s latest quarter losses.
Sun announced on Tuesday that it lost USD $201 million in the three months ended March 29. A year ago, Sun lost USD $34 million.
The surprise deal, announced last week, takes Oracle into a whole new area – hardware, writes Samantha Sai for storage.biz-news.
In a letter to partners and customers Oracle president, Charles Phillips, wrote: "Our customers have been asking us to step up to a broader role to reduce complexity, risk and cost by delivering a highly-optimized standards-based product stack.
"Oracle plans to deliver these benefits by offering a broad range of products, including servers and storage, with all the integrated pieces: hardware operating system, database, middleware and applications."
The general opinion in the market, however, is that IBM was a better fit for Sun than Oracle. IBM was already in the storage business.
Wedbush Morgan’s analyst, Kaushik Roy, said Oracle is getting into totally new markets in which they have no expertise or history.
"I am skeptical. Oracle is more likely to hold on to the entire storage business," he said.
"Sun bought StorageTek and destroyed the company because of poor execution. But Oracle has been much better in execution, and it is very likely that the current storage group within Sun will have a better opportunity to grow."
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| Oracle president, Charles Phillips |
The impact on other storage players and their relationship with Oracle will be determined in time.
EMC–Oracle had a good relationship. Now they will be competitors.
Kaushik Roy said: "But now with Oracle and Sun selling HDS at the high end, it would compete with EMC.
"We will wait to see how those relationships pan out."
As a result of this merger, Oracle is likely to wind up Sun’s storage hardware business in the long term.
However, for the present the operation may continue.
Illuminata analyst John Webster said that he is going on the assumption that Oracle runs Sun as Sun for a while before it starts restructuring.
Also unknown as yet, is the positon of Sun-NetApp and the patent dispute over the ZFS file system.
Stifel Nicolaus analyst Aaron Rakers said that Sun’s Open storage may also hit a question mark.
"We have often been intrigued by some of Sun’s storage technologies," he wrote in a research note.
"However, we have continued to see limited traction from an execution standpoint."
It is expected that the presence of Oracle in the storage market will enliven the scenario. NetApp, EMC or 3PAR must be feeling the heat.
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