Business Insight Zone

Here comes the Sun . . . but why?

Yesterday I spent a good chunk of time talking to two of my Hoover’s colleagues — Josh Lower, who has covered Sun Microsystems throughout this decade, and Seth Shafer, who has done the same for Oracle.

Unless you spent the day sequestered in jury duty or something, you’ll know we were talking about Oracle’s proposed acquisition of Sun, which has been all over the business headlines.

Several parts of the deal’s logic seem clear:

• Oracle adds Java and Solaris to its software stable. Check.
• Databases! Get yer databases here! Check.
• Oracle has been great at integrating big acquisitions, as another colleague, Jeff Dorsch, pointed out earlier. Check.
• This moves Oracle beyond “mere” competition with SAP, and puts it right in the data-center wheelhouse of Hewlett-Packard and IBM. Check.

The lingering question for all three of us:

What makes Oracle so sure it can integrate Sun’s hardware units into its own software business?

All of us have been watching the tech sector long enough to understand that “Larry Ellison’s ego” could be a sufficient answer to this question. Still, that would be a pretty scary answer, considering the size of the acquisition.

Seth raised the point that Oracle could come out looking pretty good regardless of what happens with Sun’s hardware units. If they never fit, Oracle can blame the economy — or say that the Sun units were in worse shape than anyone realized, or that Oracle realized they could get more value out of them by selling them to other hardware companies. But if the integration does work, then Ellison looks like a wizard for pulling off something that no one else even imagined.

Or maybe there’s a reason no one else ever imagined it.

Your thoughts?

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Photo by cat’s_101, used under a Creative Commons license.

Category: Deals, Technology