While the vast majority of Sun Microsystems' current revenue derives from hardware, a new Goldman Sachs report ("CIO view on the Oracle/Sun deal: IT battle lines are being redrawn") suggests that the hardware business is the part of Sun that gives Oracle the least strategic value; Java, Solaris, and MySQL provide the crown jewels of Oracle's newest acquisition.
While Oracle called out Java as "the most important software Oracle has ever acquired," the executive team provided little detail as to what Oracle expected to do with the open-source programming language.
Goldman Sachs provides some sophisticated guesswork:
We would expect Oracle to find ways to leverage its control (of Java) to gain a competitive advantage against IBM in middleware. Additionally, effective monetization of the ubiquitous Java programming language has been a longstanding question for Sun.
Goldman Sachs' Sun Microsystems analyst, David Bailey, estimates that Java-based revenues for Sun should total a little less than $300 million in fiscal year 2009 (June), growing by more than 25 percent year over year...We would expect Oracle to be more aggressive than the culturally more open source-minded Sun in monetizing Java; Oracle's reach should also be considerably greater in opening new relationship opportunities for Java licensing.
Java is an open field, already plowed and planted by Sun, now ready to be harvested by Oracle.
MySQL, however, is another matter, given its competitive tension with Oracle databases, as The Wall Street Journal calls out.
I've suggested that Oracle stands to lose the MySQL development team, if it shoves the open-source database team to the side in an effort to prevent MySQL from cannibalizing its Oracle DB sales. But after assembling a panel including two Fortune 100 CIOs, as well as the CEO of Ingres and former head of IT at NYSE, Goldman Sachs assumes a more optimistic view, arguing that while Oracle will undoubtedly protect its proprietary margins against open-source MySQL, it will also likely use "MySQL as a way to seed customers who will eventually be moved to Oracle database deployments."
Even so, Oracle faces a delicate balancing act, one that nervous MySQL customers are watching with interest. As suggested by the Financial Times, Oracle can't treat Sun's open-source software assets as heavy-handedly as it might like: Java, MySQL, Glassfish, and other Sun assets all come "preloaded" with communities--communities that will chafe at strong-arm tactics from Oracle.
I think that Oracle will figure it out. But my experience with Oracle's community outreach team is that its members don't much like to be questioned on Oracle's motives or actions. This is going to need to change quickly, if Oracle wants to maximize the value of its open-source software assets.
It's one thing to contribute to a project like Linux as one contributor among many. It's quite another to own a project like MySQL, constantly having to worry about stepping on the toes of ancillary contributors. Oracle needs to learn this lesson quickly.
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