Oracle to acquire Sun for $5.6 billion

[AppleInsider]

Oracle Corporation said Monday it has entered into a definitive agreement to acquire Sun Microsystems in a cash deal valued at $5.6 billion, paving the way for the enterprise software maker to deliver the industry's first fully integrated suite of hardware and software systems for some of the world's largest data centers.

The total transaction, valued at approximately $7.4 billion or $9.50 per share net of Sun’s cash and debt, comes just weeks after Sun was reported to have turned down a bid of $9.40 per share from IBM, which subsequently withdrew its offer after Sun canceled its exclusive negotiating rights.

Oracle said it expects the acquisition to add at least 15 cents on a non-GAAP profit to its adjusted earnings in the first full year after the deal closes. It also estimates that Sun will contribute over $1.5 billion to its 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,” said Oracle President Safra Catz.

Oracle picks up two key Sun software assets -- Java and Solaris -- in the deal that will allow it to deliver a full suite of hardware and software systems unparalleled in the industry.

Oracle Fusion Middleware, the software maker's fastest growing business, is built on top of Sun’s Java language and software, meaning Oracle can now ensure continued innovation and investment in Java technology for the benefit of its customers. Meanwhile, the Solaris operating system is the leading platform for the Oracle database, Oracle’s largest business. With Solaris now part of its product portfolio, Oracle plans optimize the Oracle database for some of the operating system's unique, high-end features.

"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," said Oracle chief executive Larry Ellison. "Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."

More specifically, Oracle will be free to more closely tie its software to Sun servers running Solaris, which power some of the most critical data centers in government and on Wall Street.

Sun's Board of Directors has unanimously approved the transaction. It is anticipated to close this summer, subject to Sun stockholder approval, certain regulatory approvals and customary closing conditions.

[ View this article at AppleInsider.com ]

[jazzguru]

I think Oracle has a lot more to gain from acquiring Sun than IBM did. This is a better deal for Sun, as well, and there is a lot less potential for layoffs due to overlap in services/products.

The implications alone of Oracle owning Java are immense. They can have a vertically integrated business model in many areas now, which has certainly worked well for Apple.

I just hope they keep developing VirtualBox and keep it free!

[mjtomlin]

Apparently Oracle has the most to lose if Sun goes under.

Although I'm not so sure about some of the comments made; IBM is also in a position to offer its customers completely integrated systems as well. They do make their own hardware and software as well.

[djames42]

I wonder what this means for the future of MySQL...

[Johnny Mozzarella]

F.I.S.H. - Fully Integrated Software and Hardware

[Booga]

Originally Posted by djames42

I wonder what this means for the future of MySQL...

My guess is that MySQL will be a lot better off under Oracle as a low-end intro DB kind of like SleepyCat.

[jcw5002]

Yeah, are you saying that IBM doesn't offer integrated Hardware/Software solutions???

[jazzguru]

Originally Posted by jcw5002

Yeah, are you saying that IBM doesn't offer integrated Hardware/Software solutions???

Assuming this question is directed at me...

No, I didn't say anything about IBM's solutions.

I said an Oracle/Sun combination is better for Oracle and Sun than an IBM/Sun combination would have been for IBM and Sun.

The article stated:

Oracle Fusion Middleware, the software maker's fastest growing business, is built on top of Sun’s Java language and software, meaning Oracle can now ensure continued innovation and investment in Java technology for the benefit of its customers. Meanwhile, the Solaris operating system is the leading platform for the Oracle database, Oracle’s largest business. With Solaris now part of its product portfolio, Oracle plans optimize the Oracle database for some of the operating system's unique, high-end features.

So, the acquisition of Java, Solaris, and other technologies will allow Oracle to have more vertically integrated solutions in the above mentioned and other areas. Indeed, Oracle will be a more formiddable competitor to IBM.

http://en.wikipedia.org/wiki/Vertical_integration

[vanax]

Yeah, the acquisition is of a type that would make the ultra-capitalist Ferengi from Star Trek proud, and has to be the most significant one so far in 2009 in the field of electronics technology/database and communication.

[quinney]

Originally Posted by jazzguru

I think Oracle has a lot more to gain from acquiring Sun than IBM did. This is a better deal for Sun, as well, and there is a lot less potential for layoffs due to overlap in services/products.

The implications alone of Oracle owning Java are immense. They can have a vertically integrated business model in many areas now, which has certainly worked well for Apple.

I just hope they keep developing VirtualBox and keep it free!

Although Oracle/Sun may be trying to move to a more vertically integrated market, there
are some differences between their situation and Apple's. For one thing, Apple has used
this model at least since the introduction of the Mac, arguably before that. Selling hardware
is new for Oracle, so the Sun acquisition will have to be fully integrated into the company,
a considerable task. Also, Apple sells to consumers and Oracle/Sun sells to enterprises.
Consumers can change their minds instantly, while enterprises have a lot of inertia to
overcome in accepting new things. Finally, Apple makes a point of differentiating their
products from those of their competitors, through styling, industrial design, or innovative
features. Sun's products, mostly servers and workstations, are considered commodities
and will be much tougher to differentiate. Note that Sun has really struggled to make a
profit for several years. This merger is probably going to take quite some time to work
out, in my opinion.

Originally Posted by mjtomlin

Apparently Oracle has the most to lose if Sun goes under.

Although I'm not so sure about some of the comments made; IBM is also in a position to offer its customers completely integrated systems as well. They do make their own hardware and software as well.

I think this view is more to the point. Oracle needs Sun, and Oracle certainly does not
want to see Sun swallowed by IBM.

[simonsharks]

A very interesting a well written article but what exactly has it got to do with Apple?

[Cbswe]

Originally Posted by simonsharks

A very interesting a well written article but what exactly has it got to do with Apple?

Java is implemented in OS X

[Johnny Mozzarella]

Originally Posted by simonsharks

A very interesting a well written article but what exactly has it got to do with Apple?

Java, MySQL, D-Trace, ZFS...

[hmurchison]

Originally Posted by simonsharks

A very interesting a well written article but what exactly has it got to do with Apple?

Is this a serious question?

Sun's influence on Apple.

MySQL
Java
DTrace
ZFS

Oracle makes iPhone apps and some developer tools

Both are Apple partners.

[bloggerblog]

The news is on SUN's homepage!!! I guess the deal is kinda finalized eh?

[jazzguru]

This supports my point about vertical integration:

"The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," said Oracle CEO Larry Ellison. "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."

http://www.sun.com/third-party/global/oracle/index.jsp

[Ireland]

$7.4 billion

[bluedalmatian]

I agree Oracle makes more sense than IBM, but Java being the key asset?Java is a dead duck

[Alonso Perez]

Originally Posted by jazzguru

So, the acquisition of Java, Solaris, and other technologies will allow Oracle to have more vertically integrated solutions in the above mentioned and other areas. Indeed, Oracle will be a more formiddable competitor to IBM.

Whatever Oracle is buying, it's not Java itself. It is, however, the core team of Java developers, assuming they don't walk. My guess is that a lot of them will, as soon as they can. Though in this economy that might not be very soon. Oracle's development culture is not a good fit with Sun's.

But I agree that this is a good move for Oracle. Oracle runs on Solaris in many key accounts, to the point where I don't think Solaris would even exist today if not for Oracle implementations. Oracle uses Java everywhere and will exert an even larger influence on its direction.

I'm wondering what will happen to Netbeans (Oracle has J Developer) as well as a lot of other stuff Sun contributed to open source. Ellison is less generous. To put it mildly.

IBM is the loser here. I don't quite know what they were thinking.

I don't see much significant impact to Apple, good or bad.

[Aizmov]

Originally Posted by bluedalmatian

I agree Oracle makes more sense than IBM, but Java being the key asset?Java is a dead duck

Java is very relevant in the enterprise.

[pnypwrmb76]

Java is alive and well in the enterprise. Most of Oracle's business applications (CRM, PeopleSoft), and server software (OC4J, BEA Weblogic) are rooted in Java.

The Oracle database itself can be closely coupled with Java.

Reports of Java's death have been greatly exaggerated (and are flat out wrong). In fact I would say that Java has even more reason to live with this acquisition.

Java is no longer just applets.

[studiomusic]

Originally Posted by Alonso Perez

Whatever Oracle is buying, it's not Java itself. It is, however, the core team of Java developers, assuming they don't walk. My guess is that a lot of them will, as soon as they can. Though in this economy that might not be very soon. Oracle's development culture is not a good fit with Sun's.

If they don't want to go 4 years without a raise because Oracle doesn't have the money, they need to leave... ask ex-Siebel employees...

[steveH]

Originally Posted by hmurchison

Is this a serious question?

Sun's influence on Apple.

MySQL
Java
DTrace
ZFS

NetBeans, OpenOffice and VirtualBox, too.

[SpamSandwich]

Originally Posted by simonsharks

A very interesting a well written article but what exactly has it got to do with Apple?

Uhhh...... Oracle is going to have an App Store app?

[anantksundaram]

Your headline (and a part of text) could be a bit confusing.

My interpretation of the numbers is the following. The aggregate non-cash value (or the valuation of just Sun's debt + equity, keeping aside Sun's cash; i.e., the value of the operating side Sun's business) is $5.6 billion.

The value of equity in Sun = Value of Operations (5.6B) - Value of Debt (0.7B) + Value of Cash (~2.5B) = $7.4 billion.

[mdriftmeyer]

Originally Posted by jazzguru

I think Oracle has a lot more to gain from acquiring Sun than IBM did. This is a better deal for Sun, as well, and there is a lot less potential for layoffs due to overlap in services/products.

The implications alone of Oracle owning Java are immense. They can have a vertically integrated business model in many areas now, which has certainly worked well for Apple.

I just hope they keep developing VirtualBox and keep it free!

Oracle is developing Btrfs : http://btrfs.wiki.kernel.org/index.php/Main_Page

What I think Oracle will now do is port ZFS to Linux and work with Apple to make sure ZFS on Linux and OS X are seemless.

Oracle will put more resources into OpenOffice and VirtualBox, not to mention Java.

Ellison is Job's personal best friend.

[urbansprawl]

Originally Posted by Booga

My guess is that MySQL will be a lot better off under Oracle as a low-end intro DB kind of like SleepyCat.

that's a sad sad statement. mysql is a major competitive product to Oracle. they rival in performance with Oracle a bit ahead. it's really a shame if Oracle gets their hands on MySQL because it's going to go downhill. unless of course the recent news of community branches saves it from Oracles grasp...

[baredd]

I wait with baited breth to see what happens. If oracle contiune the development of open source system I believe this will have a great positive effect on the community. However if they decide that MySQL is to much or a rival as well as other open source systems developed by sun I forsee them being competely wiped out. I hope the first option prevails, as oracle could bring a few nice features to MySQL and vice versa.

[mdriftmeyer]

Originally Posted by urbansprawl

that's a sad sad statement. mysql is a major competitive product to Oracle. they rival in performance with Oracle a bit ahead. it's really a shame if Oracle gets their hands on MySQL because it's going to go downhill. unless of course the recent news of community branches saves it from Oracles grasp...

You're correct. There is no way it will be entry level other than to [along side PostgreSQL] be two RDBMS Systems to work with Oracle 11g.

Oracle will use MySQL and PostgreSQL to drive the small-to-mid-tier solutions.

It will then focus Oracle 11g on upper tier only customers.

Hell, they might even do something wise and clean up Oracle 11g to better work with and compliment MySQL 5.1.x+ and PostgreSQL 8.3.x+.

If I were running the DB Solutions team I'd focus on providing Tools for MySQL, PostgreSQL and Oracle 11g+ that address their varying markets.

Obviously, PostgreSQL competes with Oracle, just like MySQL.

Oracle may even come to a time where it provides such a suite of tools that they end-of-life Oracle 11/12 [whatever they call it] and sell their enterprise services for MySQL and PostgreSQL.

[MacTel]

Originally Posted by mjtomlin

Apparently Oracle has the most to lose if Sun goes under.

Although I'm not so sure about some of the comments made; IBM is also in a position to offer its customers completely integrated systems as well. They do make their own hardware and software as well.

Most of their tools utilize Java. The real benefit is all the Unix/Linux/Java development staff they'll be getting. Plus the Solaris code base.

Wonder what this means for ZFS for Apple.

[mdriftmeyer]

Originally Posted by MacTel

Most of their tools utilize Java. The real benefit is all the Unix/Linux/Java development staff they'll be getting. Plus the Solaris code base.

Wonder what this means for ZFS for Apple.

It means ZFS on Linux and OS X. Will Linux continue with Btrfs being co-developed by Oracle and the Linux community? Most likely they will definitely continue it's efforts.

Will dtrace finally be natively supported in Linux? Count on it. Oracle will have to deal with where it wants to work with Linux and where it wants to use Solaris/OpenSolaris.

[vinea]

Originally Posted by mdriftmeyer

Oracle is developing Btrfs : http://btrfs.wiki.kernel.org/index.php/Main_Page

What I think Oracle will now do is port ZFS to Linux and work with Apple to make sure ZFS on Linux and OS X are seemless.

Oracle will put more resources into OpenOffice and VirtualBox, not to mention Java.

Ellison is Job's personal best friend.

Why? To what advantage is it for Oracle to continue to make linux its primary OS when it just purchased the Sun hardware business and Solaris for $5B?

On Sun's big servers Solaris is superior to linux and frankly the whole open source thing has been a disaster for Sun. My little pony has done very poorly at wooing the FOSS folks despite giving away the kingdom and frankly there's no money in it.

IBM has been far more successful at destroying Sun with Linux than Sun has impacted MS with OpenOffice. That's simply pointless money to be spending. Oracle should gain brownie points with both MS and the FOSS world by making it a completely open source project and letting go the reins.

Glassfish and MySql will become entry level products like IBM's WebSphere Community Edition. MySQL has been gutted anyway since most of the key devs have left and it's been forked. Also as a minor irritant to Redhat/JBoss.

If Oracle wanted to make a big services/software/open source play they'd have bought Red Hat instead and ended up simply a weaker version of IBM.

By getting Sun they're making a vertically integrated systems play vs services and trying to become the Apple of the enterprise world. Position the Unbreakable Linux + MySql + Glassfish on commodity hardware as the low end solution and open source banner waving (to keep RedHat scraping by at the commodity end of the enterprise market) and then make bank on high end Solaris + Oracle + WebLogic on high end multi-way servers. I would keep ZFS for myself and away from IBM/Linux and keep it CDDL.

Shame about netbeans though. The good pieces are going to go to Eclipse but even with whatever bad blood that will cause having ONE decent free Java IDE will be better then two half assed ones. God do I hate Eclipse but I'm pretty glad we didn't go Netbeans and Netbeans Platform.

[physics]

Originally Posted by steveH

NetBeans, OpenOffice and VirtualBox, too.

I wonder what this means for the future development of OpenOffice. As a 15 year Windows user who has recently migrated away from MS's bloated crapware, I was looking forward to converting all of my apps to open source and was really interested in adopting OpenOffice. If OO is going to wither and die under Oracle's control, it doesn't make much sense to me to invest time and effort to become a proficient user of OO. If that's the case then I would have to go with MS Office for the Mac when MS restores VBA functionality back to Word.

[simonsharks]

Originally Posted by Johnny Mozzarella

Java, MySQL, D-Trace, ZFS...

Originally Posted by Cbswe

Java is implemented in OS X

Originally Posted by hmurchison

Is this a serious question?

Sun's influence on Apple.

MySQL
Java
DTrace
ZFS

Oracle makes iPhone apps and some developer tools

Both are Apple partners.

These are all good reasons but none of them are mentioned in the article. Why aren't AppleInsider providing an Apple perspective on this story?

[mdriftmeyer]

Originally Posted by vinea

Why? To what advantage is it for Oracle to continue to make linux its primary OS when it just purchased the Sun hardware business and Solaris for $5B?

On Sun's big servers Solaris is superior to linux and frankly the whole open source thing has been a disaster for Sun. My little pony has done very poorly at wooing the FOSS folks despite giving away the kingdom and frankly there's no money in it.

IBM has been far more successful at destroying Sun with Linux than Sun has impacted MS with OpenOffice. That's simply pointless money to be spending. Oracle should gain brownie points with both MS and the FOSS world by making it a completely open source project and letting go the reins.

Glassfish and MySql will become entry level products like IBM's WebSphere Community Edition. MySQL has been gutted anyway since most of the key devs have left and it's been forked. Also as a minor irritant to Redhat/JBoss.

If Oracle wanted to make a big services/software/open source play they'd have bought Red Hat instead and ended up simply a weaker version of IBM.

By getting Sun they're making a vertically integrated systems play vs services and trying to become the Apple of the enterprise world. Position the Unbreakable Linux + MySql + Glassfish on commodity hardware as the low end solution and open source banner waving (to keep RedHat scraping by at the commodity end of the enterprise market) and then make bank on high end Solaris + Oracle + WebLogic on high end multi-way servers. I would keep ZFS for myself and away from IBM/Linux and keep it CDDL.

Shame about netbeans though. The good pieces are going to go to Eclipse but even with whatever bad blood that will cause having ONE decent free Java IDE will be better then two half assed ones. God do I hate Eclipse but I'm pretty glad we didn't go Netbeans and Netbeans Platform.

Just watch. Linux will continue to be Oracle's primary OS. Solaris will be for their Fortune 50/100 clients and Linux because guess what? Those clients are moving more to Linux and Oracle still wants them to use Oracle Dbase. Fortunately, Oracle sees the writing on the wall for their flag ship and is starting to lose clients to MySQL which they now own.

They are covering all fronts for their business goals.

I wouldn't think 50 Million plus downloads of OpenOffice.org 3.x is small, by any measurement. 90% of those downloads are for the Windows platform.

OO 3.1 and especially 3.2 adds even more compelling reasons to dump MS Office.

[vinea]

Originally Posted by mdriftmeyer

Just watch. Linux will continue to be Oracle's primary OS. Solaris will be for their Fortune 50/100 clients and Linux because guess what? Those clients are moving more to Linux and Oracle still wants them to use Oracle Dbase. Fortunately, Oracle sees the writing on the wall for their flag ship and is starting to lose clients to MySQL which they now own.

Yes, we'll see.

Oracle probably lost as much to MS SQL as it did to MySql in terms of real revenue. MySQL was generating maybe $40-70M in revenue per year. Sure, they have InnoDB as well but jeez. The DB market was $18B in 2007. SQL Server had 18% market share vs Oracle's 44% in 2007. MySQL had 0.2% market sahre in terms of revenue.

How on earth are you going to replace a $7B revenue stream with one at best $70M? You can't without going the Sun route (out of business). Open Source is a spoiler at their level...a weapon to bludgeon the revenue stream of the market leader with. IBM linux services revenue is simply acceptance that they could live with 1-10% or the original market revenue stream if it killed Sun in the process and got more hardware share out of it even at the expense of AIX. Something they achieved.

MySQL hurts MS SQL a lot more since MS SQL is still middle tier. Even then it's still a $3.1B revenue stream.

Sure, there may be a lot of MySQL installs out there but it doesn't generate that much revenue for the company that owns it in comparison to proprietary DB owners.

They are covering all fronts for their business goals.

I wouldn't think 50 Million plus downloads of OpenOffice.org 3.x is small, by any measurement. 90% of those downloads are for the Windows platform.

OO 3.1 and especially 3.2 adds even more compelling reasons to dump MS Office.

Vs 95% market share and 400M MS Office users. Not all of those downloads translate into users and OO doesn't translate into a usable revenue stream for Oracle at all.

As a revenue destruction tool to hurt MS it's still debatable. Ellison dislikes MS so he might invest more but OO probably hurts Works sales more than Office.

[dstranathan]

How could Apple be affected by this? Lets break it down in big chunks...

Solaris: Larry can go head-to-head against MS on the Server OS front (and possibly the workstation too of course) = good for Apple?
D-Trace & Instruments
Java
ZFS (potential replacement of HFS+)
Solaris is starting to use Darwin's SMB/CIFS client (which in turn was based on NetBDS and FreeBSD's)
Open Firmware (deprecated at Apple)
MySQL
Larry and Steve are pals
Scott and Steve are pals right?
Sun uses a LOT of Macs in their corporate offices, and so do their engineers and techs.
VirtualBox
OpenOffice: Larry now owns a another product that directly competes with Bill (and another productivity option for Apple) - but no DAV/EWS/MAPI Exchange client...yet.
Oracle has a couple iPhone apps
Apple has been supported by Oracle as a server platform with Xserve RAIDs etc http://www.oracle.com/partnerships/hw/apple/index.html

[ulfoaf]

Originally Posted by dstranathan

How could Apple be affected by this? Lets break it down in big chunks...

Solaris: Larry can go head-to-head against MS on the Server OS front (and possibly the workstation too of course) = good for Apple?
D-Trace & Instruments
Java
ZFS (potential replacement of HFS+)
Solaris is starting to use Darwin's SMB/CIFS client (which in turn was based on NetBDS and FreeBSD's)
Open Firmware (deprecated at Apple)
MySQL
Larry and Steve are pals
Scott and Steve are pals right?
Sun uses a LOT of Macs in their corporate offices, and so do their engineers and techs.
VirtualBox
OpenOffice: Larry now owns a another product that directly competes with Bill (and another productivity option for Apple) - but no DAV/EWS/MAPI Exchange client...yet.
Oracle has a couple iPhone apps
Apple has been supported by Oracle as a server platform with Xserve RAIDs etc http://www.oracle.com/partnerships/hw/apple/index.html

Very curious what will happen with Solaris. From what I saw as a user, I liked it in the past.

[lukevaxhacker]

Originally Posted by simonsharks

A very interesting a well written article but what exactly has it got to do with Apple?

Oracle's CEO Larry Ellison is on Apple's board.

Oracle's database software runs on MacOS X . Still haven't *quite* convinced my Oracle employee neighbor to get a Mac, though...

[JeffDM]

Originally Posted by vanax

Yeah, the acquisition is of a type that would make the ultra-capitalist Ferengi from Star Trek proud, and has to be the most significant one so far in 2009 in the field of electronics technology/database and communication.

I don't see a Carl Icahn-style raiding going on here though. This applies to their business, and it may be very beneficial to them. If someone else got the company, I think it really would have been seriously gutted.

Originally Posted by mdriftmeyer

What I think Oracle will now do is port ZFS to Linux and work with Apple to make sure ZFS on Linux and OS X are seemless.

I thought ZFS was already in Linux, or did that get sidelined?

Originally Posted by dstranathan

Scott and Steve are pals right?
Sun uses a LOT of Macs in their corporate offices, and so do their engineers and techs.

How many and for what particular reasons? I understand that many may be needed to develop for OS X, are there a lot more than that can account?