Oracle's Ellison wants to be in hardware

There's been a lot of speculation that Oracle purchased Sun for its software assets like Java, Solaris, and--although this point has seen more debate--MySQL. Even those of us who viewed the acquisition as a serious play by Oracle to become a full-fledged system vendor figured those systems would be mostly x86. That's not to say Oracle would kill SPARC processor development and servers outright--the installed base is too large and profitable--but it would be a business to milk, not to invest in.

However, Oracle CEO Larry Ellison, writing in an e-mail interview with Reuters, claims to have big plans for Sun's server business--including its in-house processor design capabilities.

Ellison begins by stating that "we are definitely not going to exit the hardware business." It doesn't get much more definitive than that as to Oracle's overall strategy of being a systems company.

What Ellison has in mind here is integration. He goes on to write that:

While most hardware businesses are low-margin, companies like Apple and Cisco enjoy very high-margins because they do a good job of designing their hardware and software to work together. If a company designs both hardware and software, it can build much better systems than if they only design the software. That's why Apple's iPhone is so much better than Microsoft phones.

Those are fair points. And Oracle has itself experimented with hardware/software integration such as the Exadata Storage Server that uses HP hardware.

At the same time, the idea that you can be in the server business and only sell into the profitable niches strikes me as a notion that Oracle may not want to depend upon too much. (Cisco has made similar statements with respect to its Unified Computing System.) The history of the system vendor business going back at least a decade suggests that the most successful companies have supply chains and partner networks that allow them to sell pallets of small servers in addition to a smaller number of highly profitable large ones.

Ellison then goes on to make it equally clear that he's not interested in just bundling software and hardware but deeply optimizing the hardware when he writes: "Once we own Sun we're going to increase the investment in SPARC. We think designing our own chips is very, very important... Right now, SPARC chips do some things better than Intel chips and vice-versa."

By way of background, Sun's CMT SPARC chips are designed around a philosophy of handling many tasks in parallel even if it means that individual tasks may run somewhat slower than on a chip with fewer but more powerful cores. This approach lends itself well to workloads that involve a lot of relatively independent activities--such as Web and application servers. It also lends itself to very power-efficient designs.

But Ellison isn't just arguing that SPARC is good for some things and x86 is good for others. He's arguing for hardware that is truly optimized for Oracle software.

Some system features work much better if they are implemented in silicon rather than software. Once we own Sun, we'll be able to plan and synchronize new features from silicon to software, just like IBM and the other big system suppliers. We want to work with Fujitsu to design advanced features into the SPARC microprocessor aimed at improving Oracle database performance.

There remain plenty of questions about how large Oracle's investments will be and how much it will tilt toward its own processor-server-operating system-middleware-applications stack. It will, of course, continue to sell software to run on HP, IBM, Dell, or wherever else it can garner license revenue from.

However, on the face of it Oracle has grand visions for its Sun acquisition that go well beyond selectively mining some key software assets and milking the rest. Oracle's purchase of Sun was the latest example of the general shift back to a more vertically-integrated computer industry going on. This latest interview with Ellison makes that point again--with exclamation points.

[Mr. Dee]

Its moments like this I say thank God for Bill Gates and his ruthlessness during the 90's. If it were not for his competitiveness and willingness to fight the good fight, we would have to put up with obnoxious individuals like Steve Jobs and Larry 'the devil' Ellison charging us an arm and a leg along with our souls to use their rather crappy platforms. I hope something spectacular happens where the SUN deal just goes sour and Microsoft destroys them in the process. Sorry, but I just hate arrogant, weird people like Jobs and Ellison with their devil looking eyebrows.

[1g2j]

Agreed!

[TxTom21]

"Devil looking eyebrows"..."Crappy platforms"...

Mac doing quite well, Apple very healthy, iPod the dominant player (no pun) in its field, the iPhone setting the standard to which others TRY reach.

Not knowing you, I'd have to speculate either jingoism or jealousy.

[ghaff]

Leaving aside the comments about specific individuals and companies... I agree that the shift to horizontal integration (not just Microsoft Windows but also Intel, the x86 architecture in general, open communications standards, storage that could be used across a wide variety of system platforms, etc.) radically reduced costs to end users. And, even if we are seeing a certain swing back to more vertically integrated companies, it's vertical integration within the context of a lot more interoperability and volume economics than we saw previously.

[Mr. Dee]

I am not a jingoist, I am simply trying to state, these same people we over respect and consider to be the good guys fighting for openness and better alternatives are simply foxes trying to get in a hen house that they only managed to get a hold of a few who were outside. Steve Jobs and Larry want to control the entire experience. Tell me now, how is that an open approach that users and businesses can agree with? You would be subjected to the vendors every wrath! I can't see Apple owning 90% of the desktop, I can't see Larry owning the Datacenter, but that is what they have in mind. We see what Apple can do with the iPhone, third party developers are constantly complaining about the App Store approval process, Oracle customers are constantly complaining about the cost of licensing their software. Sorry, but Microsoft is the best and I think we should accept that and just move forward with our lives.

[idfubar]

Dude, seriously? No one wants to ask Mr. Dee (a) if can actually account for what he "pays" for and (b) what sort of an understanding of "cost" he has?

PS: Your use of "them" is unqualified (Oracle or Sun Microsystems?) and your ad-hominem attack on the appearance of two people you've probably never met gives you yourself an air of arrogance; get a clue.