Subba’s Serendipitous moments

April 20, 2009

Oracle acquires Sun — Unexpected and interesting

Oracle announced that it is going to acquire Sun for $9.50 in cash valuing Sun at about $7.5 billion or $5.6 billion net of Sun’s cash and debt.

The deal comes after talks between IBM and Sun failed. I had analyzed why the IBM may not really need Sun here and here. IBM had offered $9.40 per share. Oracle’s offer is a 40% premium over Sun’s closing price.

However this acquisition by Oracle is both unexpected and very interesting. Sun’s software assets could become better strategic assets to Oracle than Sun’s server or storage business. After Sun acquired MySQL , the relationship between Oracle and Sun had soured. Oracle had acquired Innobase to neutralize MySQL but it hadn’t made much headway. Of course Java could become the pivot of Oracle’s middleware strategy.

The open source database angle becomes interesting. Having MySQL in its stable gives Oracle access to its huge developer base and web applications market. Will Oracle kill MySQL to protect the Oracle 11g cloud margins or milk it for whatever it is worth before allowing it to die in neglect will be interesting to watch.

Sun has a large installed base and becomes an immediate target market for Oracle to target with its applications.

Since Sun’s manufacturing is already outsourced, there’s nothing much left for Oracle to do. It can sell whatever is left in the hardware business — the storage, server and any other chip business to either HP or Dell.

Oracle now fine tunes the database performance on Solaris and sells a combo. HP and others will feel the impact.

Oracle gets the scale and muscle to attack IBM.

On the overall, there seems to be a better strategic fit between Oracle and Sun, than Oracle and IBM. Both companies also have a strong feisty culture and hyper competitive spirits so integrating them could be easier.

What is also interesting is that Sun’s board approved the deal quickly and unanimously after just scoffing IBM’s deal which was just 10 cents less per share.


September 10, 2008

Cloud is confusing!

Filed under: Business,Model — Subbaraman Iyer @ 2:40 pm
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“Cloud computing” has been a buzzword and it means different things to different people. What started as the ASP in the early part of the decade, morphed to Utility computing and now everything is “Cloud computing”.

Generically speaking, the tern “cloud computing” is just an alternate¬† solution that doesn’t use the in-house data centre or any vendor specific hosting resource. It is a virtual huge infrastructure where both computing and storage resource is available on a pay-as-you-go on-demand basis. The compelling benefit is in its scalability¬† and the ability to access an application anywhere. There are clearly 2 distinct layers in the cloud:

Infrastructure: Amazon Web services is the poster child offering both computing and storage resources with a simple API interface. It has been a tremendous success gauged by the fact that Amazon’s EC2 and S3 in Q4 2007 exceeded all of Amazon’s web properties during its own peak time. See the impressive evidence here.

Platform: Google’s AppEngine and a few other platforms offer a development environment where the developer adheres to certain guidelines and the scaling is performed by the platform.

However Forrester in their latest report have expanded the definition of the “cloud computing” and in the process have even made the definition even foggier.

Clearly Software as a service and Web services cannot be considered as part of a cloud since the former is a specific end user software with a specific functionality focus. They outgrew from the traditional world of the application service provider hosted and are the least flexible. The Web services world again is a specific application for an organization.

If one takes the factors flexibility, scalability, ubiquity as the cornerstones of cloud computing, I fail to understand how SaaS or Web services or even App components-as-a-service become part of the cloud.

In my view it is only the bottom 3 layers that constitute the cloud. I would like to view the Cloud as just another way the IT infrastructure is being delivered and consumed.

I am just waiting to see how the other analysts define the cloud.

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