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Oracle/Sun behemoth makes customer negotiations tricky

Deal would make Oracle industry's "most powerful open source vendor"

By , Network World
December 02, 2009 01:30 PM ET

Network World - Oracle's acquisition of Sun has hit some European roadblocks, but if it goes through customers will have to prepare to negotiate with a new IT behemoth. With Sun on board, Oracle will have the software and hardware it needs to compete against more well-rounded companies such as IBM, and could vault up to the top of the open source industry, according to Gartner.

"Believe it or not, Oracle would become the most powerful open source vendor in the market today, bar none," analyst George Weiss told audience members at this week's Gartner Data Center Conference in Las Vegas.

The European Commission has objected to Oracle's pending acquisition of Sun, saying the combination of Oracle's database products with Sun's open source MySQL violates European competition laws. But a compromise could still be worked out allowing the completion of the acquisition.

The combination of Oracle, a software vendor with a proprietary history, with Sun, a hardware vendor with open source inclinations, raises many questions. These questions, Weiss says, including the following:

• Will Oracle support IBM applications, such as WebSphere, on Sun's Sparc servers?
• Will Oracle put most of its efforts into Linux or Solaris?
• Will Oracle continue Sun's partnership with Fujitsu to design Sparc processors?
• Will Oracle attempt to move existing database customers from IBM and HP servers to Sun's Sparc machines?
• How much sales energy will Oracle focus on combating IBM, HP and Dell in the x86 market?

In an electronic poll of the Gartner audience, a plurality of 46% took a positive view, saying they expect Oracle to bolster and develop broad new capabilities for Sun's hardware. The rest believe Oracle's approach to Sun hardware will be either to sell it off to another vendor, reduce and minimize to bare bones capabilities, or barely pay attention to the hardware product lines.

Weiss offered several pieces of advice to customers as they wait to see what happens with the pending Oracle/Sun acquisition. That advice includes:

• Do not negotiate multimillion dollar, long-term contracts with Sun until the European review of the merger is complete.
• Do not make a strategic long-term commitment to large Sparc servers until a long-term contract is signed between Oracle and Fujitsu.
• Existing Sun customers should try to lock Sun into long-term maintenance deals, five years or more, before Oracle can change the terms of the deal.
• Leverage Sun's poor x86 market share to obtain high server discounts.
• After the Oracle/Sun deal closes, force Oracle to document its open source strategy, and how it compares with other proprietary and open source vendors.
• Continue to use Sun's application infrastructure middleware for current projects, but postpone new commitments until a deal is done.
• Retain Java as an open standard but expect Oracle to institute licensing changes.

Because Sun licensing and pricing could change after an acquisition, customers must be aggressive in negotiations to minimize risks. Key items to negotiate include hardware maintenance, pricing and contract periods, bundling, software support on competitive hardware, and lifetime support for Solaris.

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