Ever since news got out that Oracle snapped up Sun Microsystems, a big question mark has been hanging over Sun’s SPARC business. Would Oracle kill it off? Sell it? Or would they actually invest in creating a top-to-bottom hardware+software stack, like Apple and Cisco? Oracle’s CEO has given the answer. And yes, that’s a new category icon up there.
In a SEC filing yesterday, as well as during a talk with Reuters, Oracle CEO Larry Ellison explained he wants Oracle to become like Cisco and Apple. “We’re definitely not going to exit the hardware business,” Ellison said, “[Apple and Cisco] enjoy very high-margins because they do a good job of designing their hardware and software to work together.”
He also said that Oracle will stick to the SPARC architecture, which can only be seen as a win for us enthusiasts. “Once we own Sun we’re going to increase the investment in SPARC. We think designing our own chips is very, very important,” Ellison said, “Right now, SPARC chips do some things better than Intel chips and vice-versa. For example, SPARC is much more energy efficient than Intel while delivering the same performance on a per socket basis. SPARC machines are much less expensive to run than
He further explained:
We want to work with Fujitsu to design advanced features into the SPARC microprocessor aimed at improving Oracle database performance. In my opinion, this will enable SPARC Solaris open-system mainframes and servers to challenge IBM’s dominance in the data center. Sun was very successful for a very long time selling computer systems based on the SPARC chip and the Solaris operating system. Now, with the added power of integrated Oracle software, we think they can be again.
Even though these are just words, they should reassure SPARC enthusiasts and customers. Only time will tell, however, how much these words are worth.
Larry Ellison is hardly going to say “Yer, we’re going to savage 20,000 jobs”. Keep in mind that this is not a done deal yet and he has some sweet talking left to do.
One thing that I’ve learned is that Oracle are ruthless when it comes to costs and returns. They’re not a great technology company by any stretch of the imagination and even worse at creatiing a ‘brand’, so that whole thing about being like Apple and doing hardware is hilarious (What did happen to that ‘Network Computer'(tm) Larry?), but their attention to costs and returns has given them a cash pile that has allowed them to buy Sun and ride the current storm. Honestly, Sun need some of that nous desperately.
SPARC isn’t going to just fall off a cliff, but one thing I could see coming is selling it back to Fujitsu completely – if they’ll have it – and cutting the costs of developing the platform. They’ll still sell SPARC and use it, which might be Larry’s sleight of hand, but it won’t be backed by Sun with development money. I don’t know whether Fujitsu could make it pay though. Sun need to cut their exhorbitant costs here versus their declining margins, something that they have failed to do over the years.
True to form, Oracle will look at the bottom line with server sales versus development costs:
That doesn’t paint a pretty picture. Everybody’s sales are down, but when you’re reliant on server sales as much as Sun are then it’s difficult for Oracle to keep justifying SPARC unless they can make the margins far bigger. You never know though. Oracle have been known to sell sand to Arabs and it’s what they’re good at. The only reason IBM makes money out of Power is because of what they sell with it. Server sales themselves are not enough.