Oracle, Sun merger to shake up hardware market

22 April 2009

Oracle Corp's $7.1-billion purchase of Sun Microsystems Inc is expected to shake up the technology market as it adds hardware cpapbilities to the enterprise software giant.

 The deal propels Oracle to the No. 2 position after International Business Machines Corp (IBM), in the $17-billion market for high-end Unix computers. (See: Oracle trumps IBM, acquires Sun Microsystems for $7.4 billion).

Hewlett Packard Co is the No. 3 player in this space.

Servers, the computers that run web sites and networks, account for almost half of Sun's revenue and its acquisition gives Oracle control of Sun's Java software, one of the world's most widely-used computer languages, and the Solaris operating system for Unix servers.

Although Oracle had spent more $34.5 billion in acquisitions since 2005, Sun is seen as the jewel in its crown. Oracle had spent $8.5 billion last year on BEA and $10.3 billion on PeopleSoft in 2005.

While there are questions about Oracle moving into the hardware business, the benefits of it buying Sun's software units are clear. The purchase would enable Oracle to offer a complete package of information technology products for all of businesses' technology needs. At the same time, getting into the hardware business could hurt Oracle's margins and test its management's ability to fight an uphill struggle in an industry other than software.