Sun Shareholders Vote to Sell to Oracle
July 20, 2009 Timothy Prickett Morgan
The deed is done, the die is cast, and unless the antitrust regulators in the United States or Europe throw a spanner in the works, the deal is going to be signed on the dotted line. I am referring, of course, to software powerhouse Oracle‘s $5.6 billion acquisition of server, storage, and operating system maker Sun Microsystems.
Last Thursday morning, shareholders of Sun gathered in its Santa Clara, California, headquarters and voted on the proposed acquisition of Sun by Oracle. And 62 percent of the aggregate shares were tendered in favor of the deal, which means that Oracle, once it gets regulatory approval, will be a server and storage company with the Solaris 10 Unix operating system and the Java programming language and runtime environment to tend to. The vote was not exactly unanimous, and clearly some people wanted to hold out for a better deal. There isn’t going to be a better deal, not with Sun’s revenues down by around a third in the quarter ended in June and very little prospect for growth until the Oracle deal is signed and completed, possibly by the end of the summer.
Oracle’s top brass has been trying to convince Sun’s customers that it is committed to the Sparc processor and Sun’s server and storage hardware businesses, but there are plenty of people who just don’t believe it. They don’t believe that a vendor that is used to the high-margin software business is going to actually invest the resources in a lower-margin hardware business. Oracle’s co-president, Charles Phillips, talked about how Oracle created an integrated system, akin to IBM’s AS/400, with a complete stack of hardware and software that is easier and cheaper for the company to support than a matrix of possible combinations of server hardware, operating systems, middleware, and application software. While it is possible that Oracle may indeed do this with a Solaris platform, and perhaps even one based on Sparc processors, there has been nothing stopping Oracle from doing this all these years, and it has not been tempted to create an Oracle version of the AS/400.
Of course, as I pointed out in an article over at The Register entitled Moon Macrosystems: How to build a better Sun (Go ahead. Take a crack at it), there is nothing stopping any of us from doing the same thing with Sun’s software stack, considering that it is all open source at this point. Exactly what Oracle is paying money for is unclear. It could have merely taken the code, spent $1 billion on building a Solaris practice, created X64-based Solaris System/500s or whatever you want to call them, and pocketed the rest of its cash.
Silicon Valley is sometimes more about ego than anything else, I guess. The only way for Oracle’s Larry Ellison to feel like he is winning must be to see Sun’s Scott McNealy clearly feeling like his has lost.