But Wait, There's More

Merrill Lynch Says Sun Should Buy Novell or Red Hat

Unix workstation and server maker Sun Microsystems has had an on-again, off-again relationship with Linux since the platform went mainstream about five years ago. Sun bought a Linux server appliance player, Cobalt, for $2 billion at the peak of the dot-com bubble and then just tossed away that investment after a few years of pottering around. With the advent of the new Solaris 10 Unix and Sun's increasing emphasis on Opteron-based servers, Sun is "doubling down," as CEO Scott McNealy likes to say, on Unix. But this, according to brokerage house Merrill Lynch, is not going to be a sufficient strategy to counter Linux. In fact, analyst Steve Milunovich says that Sun should just bite the bullet and buy either Novell or Red Hat and just admit, more or less, that Unix is dead.

This is not going to happen.

If Sun wanted to buy a real Linux distributor, it would have done so a long time ago. The company could afford to buy Red Hat or Novell, though it's not about to spend that kind of dough on what its current management sees as an inferior style of Linux. Sun believes in Solaris 10, which runs as well or better as Linux on X86 iron (provided you can get drivers, of course), and which has a much larger installed base of enterprise applications. Sun wants to use its cash hoard not to buy into Linux, but to sell Solaris against Linux. And it takes a lot less cash to do the latter, and the profits won't be all that different in the long run if Solaris 10 takes off, as many among the Unix faithful expect.

Symantec Acquires VERITAS for $13.5 Billion

That giant sucking sound you hear is not the Chinese economy eating up all of the natural resources of the planet, but rather the beginning of what will likely be a wave of consolidation in the software business. Just before the holiday break, security software specialist Symantec announced a $13.5 billion merger with storage software specialist VERITAS. Both companies have been on buying sprees in recent years and are expecting that they can get better market penetration, expand into new markets more quickly, and wring more profits from their wares by creating a software powerhouse.

While any synergy from these very different companies may not be apparent, Symantec and VERITAS make products that have an intimate knowledge of operating systems, file systems, and raw data. They are both as platform-agnostic as possible. (Symantec has concentrated on Windows and dabbles in Linux, while VERITAS has concentrated on Unix, has bought its way into Windows, with backup products, and has dabbled in Linux.) There are some synergies, and after the merger, there will definitely be some cross-selling capabilities, particularly among enterprise customers, which will be responsible for 75 percent of sales.

Symantec says that the combined company will have sales of about $5 billion in fiscal 2006 and will be the fourth largest software company in the world (behind Microsoft, IBM, and SAP). The company will have 13,000 employees, with about 6,000 in sales and support and 3,500 in development.

Dataram Delivers Clone Memory for HP Integrities

Memory supplier Dataram announced that it has begun offering clone memory modules that work inside Hewlett-Packard's Integrity rx4640-8 servers. Dataram is supplying main memory cards that match those offered by HP in 2 GB, 4 GB, and 8 GB capacities, but it is also supplying 16 GB memory modules that allow the maximum main memory of this eight-way Itanium 2 server to be boosted from 64 GB to 128 GB. The rx4640-8 is a four-socket Itanium server that uses HP's mx2 dual Madison processor modules, which pushes it from being a four-way to an eight-way server. All Integrity machines support HP-UX, Linux, Windows, and soon OpenVMS.

Dataram's 2 GB memory module for the rx4640-8 costs $809, the 4 GB module costs $1,621, the 8 GB module costs $4,189, and the 16 GB module costs $21,050. Obviously, Dataram is charging a big premium for the fattest memory modules.

Apple Upgrades Xserve CPUs, Ships Xsan Storage

Yes, the Power-based Apple Xserve G5 is a Unix server (with open-source BSD Unix at its core), and that's why we cover the product when the company makes announcements. This week, Apple announced that it has upgraded the commercial versions of the Xserve 1U rack-mounted servers so they can have the same 2.3 GHz PowerPC 970FX processors that the Virginia Tech uses in its 20 teraflops "System X" parallel supercomputer cluster.

The upgraded Xserve G5 server has a frontside bus that runs at half the clock speed (like other Power architecture machines from IBM), yielding up to 9.2 GBps of memory bandwidth. The server can be equipped with up to 8 GB of main memory, three 400-GB Serial ATA disks (with optional RAID 5 data protection), and has two 64-bit PCI-X slots. The PowerPC chips consume half the electricity of a Xeon chip with similar performance, so the high-performance-computing community may start looking at Xserves pretty seriously now that Virginia Tech has blazed the trail. The base Xserve G5 with two 2.3-GHz processors, 1 GB of main memory, and an 80 GB disk drive sells for $3,999. An Xserve with two of those processors, 2 GB of main memory, and 1.2 terabytes of disk capacity costs $7,148.

In addition to the upgraded G5 server, Apple announced the Xsan storage area network file system for use with Mac OS X. Xsan is a 64-bit clustered file system for creating SANs, and it has been sorely needed in order for Apple to move into the high-performance-computing market in a big way, and into commercial computing in general. Xsan will also allow customers in the digital media industry, where Apple desktops and servers are wickedly popular, to share files and to better collaborate on work. Apple is selling Xsan for $999 per server or for each client of server that accesses the file system; it has been certified on Xserve G4 and G5 machines and their associated Xserve RAID disk arrays, as well as on Power Mac G4 and G5 clients.

PeopleSoft Relents, Agrees to Oracle Acquisition

After a bitter 18-month battle, PeopleSoft's board of directors agreed to sell the company to Oracle for $26.50 per share, or $10.3 billion. The merger agreement has been approved by the boards of directors of both companies and should close this month. As part of the deal, the two companies will cease all legal actions against each other, including a Delaware court trial to determine the legality of PeopleSoft's anti-takeover poison pill, as well as a case that PeopleSoft was bringing against Oracle for allegedly damaging its business. It's still not clear what will become of PeopleSoft's employees and customers. As part of the deal, Oracle will obtain 12,750 PeopleSoft customers, about half of which PeopleSoft obtained in its acquisition of J.D. Edwards in the summer of 2003. At one point, Oracle had plans to fire about half of PeopleSoft's roughly 12,000 employees, but it has since softened that stance, according to reports.

George "Skip" Battle, chairman of PeopleSoft's transaction committee, said the company believes Oracle's revised offer of $26.50 provides good value for PeopleSoft stockholders. "PeopleSoft is a strong and vibrant company," he says. "This has been a long, emotional struggle, and our employees have consistently performed well under the most challenging of circumstances." The agreed-upon price of $26.50 per share is a 10 percent premium over PeopleSoft's closing price when the deal was announced just before the holidays, and a 75 percent premium over PeopleSoft's market value before Oracle first launched the takeover battle, in 2003. Oracle, which also announced its quarterly financial results, said the merger should add about 1 cent per share to its bottom line starting in the fourth quarter of its fiscal year, and 2 cents per quarter in fiscal 2006. For its third quarter ending November 30, the company earned $815 million, or 16 cents per share, a 32 percent increase from the same period last year.

Software Market Consolidation Looks to Be a 'Predator's Ball'

Now that Oracle is succeeding in its acquisition of PeopleSoft (and the former J.D. Edwards business too), pundits are declaring that the IT industry is entering a period of consolidation, which is actually something that's been happening for a while. One of the big players you'll likely see more of as this trend accelerates is Oracle. In fact, before settling on a hostile takeover bid for rival PeopleSoft, Oracle's board had seriously considered several other acquisitions, including middleware developer BEA Systems, CRM software developer Siebel Systems, business intelligence software developer Business Objects, and ERP software developer Lawson Software. Oracle may yet succeed in acquiring these vendors. "It's a period of consolidation where the strong are going to get stronger, and the weak are going to get weaker," says Larry Ellison, who, as Oracle's chief executive and one of the world's richest men, is one of the strong ones.

Another strong player to keep your eye on is IBM, which in December announced its latest acquisition, of French procurement services company KeyMRO. According to the Wall Street Journal, court records from the PeopleSoft-Oracle fight show that IBM had been targeting more than two dozen potential acquisitions in the business software market, on a list that bore the name "Predator's Ball." Here at IT Jungle, we understand that surviving, adapting, and thriving sometimes requires a hearty meal of red meat, but some of us are not looking forward to a return of 1980s Wall Street values.

Congress Allows Another 20,000 H-1B Visas

Congress has approved 20,000 new visas for skilled foreign workers. The cap had been set at 65,000 after years of running at an even higher rate, which had disastrous effects on the IT job market in the United States. IT industry executives had been pushing for 50,000 new visas, while IT workers unions (there are a few) had been lobbying Congress to keep the number of visas capped at 65,000.

As it turns out, even though the H-1B visas for 2005 were not set until late October, when the omnibus bill passed, vendors were allowed to have applicants fill out visas ahead of time, starting in the spring of 2004. So by the time the bill passed, the cap had more or less already been filled. And it won't take long for the IT industry to fill the 20,000 new positions, either, even though candidates are required to have graduated from an American university with a master's or a Ph.D.

The question now is what will happen to the unemployment rate among programmers and project managers now that the cap has been lifted. Unemployment rates had been dropping through 2004, and there is a good chance that they will now rise again because of the increase in H-1B visas. The IT industry is giving the same old song and dance about how American universities are not pumping out enough qualified computer scientists, but the truth is that H-1B employees are just "onshored" professionals who are essentially indentured servants for the companies that sponsor them, and can be deported if they lose their jobs. Small wonder they are more qualified and yet will accept lower pay. And whether or not that is legal or ethical is something you don't read about much in the papers.