Oracle As Storage Vendor

Here is a multiple choice quiz: (a) Oracle will dump all of the hardware lines of the soon-to-be acquired Sun Microsystems and just keep the software products. (b) Oracle will use Sun's hardware assets to expand its product line and become a soup-to-nuts, one-stop enterprise hardware, software and services IT vendor. (c) None of the above. (d) Only Larry Ellison knows for sure.

I pick (d). But if you've read all of the "expert" commentary on Oracle's move to acquire Sun, you will see a wide variety of answers. There is no clear consensus among industry analysts, Wall Street analysts, big IT customers, competitors or anybody else as to what this all means for Sun's hardware operations and products.

There is general agreement that Oracle wanted to gain control of Java and Solaris and some of Sun's other important software products. After watching IBM make at run at Sun, the idea that a rival might end up owning the software platforms that Oracle uses for many of its products got the software giant to make its own offer and win the company.

That immediately generated a wave of speculation as to what Ellison and Oracle would do with the parts of Sun that haven't been performing all that well in recent years and/or that didn't clearly fit into Oracle's current product line. If you read the blogosphere and analysts reports and news articles, it was pretty clear that nobody really knew what Larry and Co. would do with Sun's server and storage portfolios. And very few folks seemed to believe Ellison when he said he was planning to keep it all.

I don't have any idea what Oracle is going to do either. But I do wonder if Oracle can maintain its "my way or the highway" approach in a highly competitive hardware market. Remember, this is a company that pretty much automatically charges every software customers an annual 22 maintenance percent fee, and there isn't much room for negotiations. Part of the reason for that is Oracle has become the standard for enterprise databases in many companies, and it also is gaining ground in many other important enterprise software markets. While it faces tough competitors like IBM and SAP and others in many of those markets, it doesn't have to deal with hundreds of rivals eager to gain market share by selling comparable products at much lower prices.

Ellison is the guy who used to complain about customers who wanted to customize software applications and said they should be satisfied with the functionality they got out of the box. That argument won't fly with enterprise storage customers. Storage can be much more complicated than software (or servers) and require much more product tweaking and customer support. Couple that with much lower profit margins, and it makes me wonder whether Oracle will decide sooner rather than later that storage isn't a business it wants to be in. Yes, Ellison has said he wants to supply integrated appliances that include everything a customer needs to run the business. But does he really want to sell tape systems? Push ZFS and Open Storage systems?

A report by InformationWeek's Paul McDougall makes clear that Oracle originally only wanted Sun's software assets, despite Ellison's claims. He was going to leave Sun's declining hardware unit to the vultures.

Byte and Switch blogger George Crump suggests that the best move would be for Oracle to spin the Sun storage group out and see if it can compete without the shackles of Sun wrapped around its feet. An interesting idea, but I'm not sure whether Sun Storage would have enough going for it to survive on its own. Still, that sounds like a better prospect than being part of Oracle.

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