Why Oracle Bought Sun: It's Not About Hardware

AMR Research has recapped its annual ranking of the top 50 enterprise software vendors, but the real story may be in its findings that more than 60 percent of enterprise software vendors have applications that rely on Java.

And of the top 50 enterprise software vendors 33 offer applications that rely on Java. Add it up and this group represents more than $38.5 billion, or 77 percent of the top 50’s revenue.

Anyone out there still think Oracle’s acquisition of Sun (JAVA) was about hardware?

Simply put, Oracle (ORCL) through Java has its hand in most of the enterprise application market. AMR reckons that these Java-reliant vendors will have to reevaluate their commitment to Java. That’s putting it mildly.

Here’s a look at the top 50 enterprise application vendors by revenue.

Comments

[whidbey:]

Yes, I knew this, but not in detail you provide, thanks.

I think it was smart to grab Sun and I think it will seem smarter the longer it lasts. If Oracle could clean up its own product lines and focus, its overall position will be good comparatively. I would love to know if this acquisition was strategic in fact or just product extension.

Jul 08 02:04 PM

[Tim Miles:]

Another interesting article by Larry Dignan. That's why I always try to read him.

Jul 09 09:08 AM

[BeachRider:]

Was JAVA worth $7.5Bn, though? Management & monetization of Java is clearly in ORCL's wheelhouse. The could also be true of other Sun software-assets. The struggle for ORCL will be managing and monetizing the hardware-assets. Sun has already canceled Rock. That casts a pall over the Niagara products. The pall must be removed for Niagara to be invigorated. The StorageTek assests have also gotten bogged down and need similar capital/direction to get into the growth-niches of the storage market.
These hardware activities have a substantial downside that needs to be avoided. ORCL needs to tell us how they do that. They have no history with this segment of IT, either.

Jul 09 10:16 AM

[MikeCooper:]

Java's ubiquity is well known. But if leveraging that ubiquity was so easy Sun would have been the one buying Oracle. My guess is that in Sun, Larry simply saw a lot of state-of-the-art research, a diverse product portfolio ,and a patent library almost as big as IBMs on sale at a bargain price.

Larry likes a conquest. Developing business strategies are specific products (remember "unbreakable linux" ??!!) is not his forte.

Jul 09 11:01 AM

[Left coaster:]

Insightful analysis but as mentioned before, Sun's server portfolio w/o Rock has no future. Sun will be dependent on Fujitsu for any advances but w/o Rock, where can Sparc go? x64 is a low profit commodity business. Tape is going away fast ( witness the recent slug fest for Data Domain and you'll see why ) and there goes the bulk of the STK revenue. Sun has no I.P in their SAN products - all OEM'd. Ditto, Sun has no P.S. to fall back on. Oracle already has competing Identity Management products and with BEA got a much superior middleware portfolio than Sun has ( Glassfish etc ).

So where's the revenue?

Jul 13 12:43 PM

[User 447367:]

Oracle's products are purely based on Java and they have invested very heavily on these products. Their future is totally dependent on Oracle Fusion Middleware and other related products. Oracle don't want some other company (specially IBM) to own a Java and be a dependent on it for new features. They tried with Oracle Linux and didn't go any further.

Jul 14 11:52 AM

[User 394611:]

The future software offerings will have a hardware ingredient. Cloud computing defined as "hybrid" or "private" gives the customers a lock-stock-and-barrel solution. Sun hardware will be the revenues enhancer for Oracle, and this why Oracle will top SAP revenues in next few years. See my-inner-voice.blogspo...

Jul 14 02:00 PM