Project 2501 by Andy Patrizio (bio )

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A better fate for Sun. Maybe.

By Andy Patrizio on April 20, 2009 3:04 PM

Who needs coffee to start your Monday when you have a huge Silicon Valley merger to open your eyes? A merger of this scale is not usually done in the space of a week, but that's what appears to have happened.

There are still a whole lot of questions to be answered, of course, but all things considered, this is a far better end for Sun than it was facing with IBM. The general consensus on IBM buying Sun was that the hardware business would be decimated and Sparc was toast. Now it has a chance to live on.

Under an IBM merger, I had heard anywhere from a third to up to half of Sun's people would be cut. Maybe, just maybe, Scott McNealy thought of them instead of his golden parachute. With less overlap, the Oracle deal could mean a lot fewer people out of work, and that's good for everyone. California's unemployment rate is high enough.

Of course, things could all go in the opposite direction. Oracle Co-President Safra Catz did make it clear on the conference call discussing the merger that the hardware business would have to be profitable, and Sun is legendary for its R&D spending. Will Rock ever see the light of day? I'm still not sure after this.

It's funny how despite all the copy I've seen written about this merger, it was the Farkers who pointed out the obvious: Oracle now gets to be IBM. (That's why I love you guys. The jokes written in SQL code were a nice touch, too.)

IBM, now minus the PC business, is essentially a software and services company built around hardware. In its most recent quarter, hardware only accounted for 10 percent of sales, but all the software and services that CEO Sam Palmisano has built the company around are based on that hardware.

Now Larry Ellison has exactly that. He will have some impressive hardware that has been given the short shrift lately, hardware that bares a very strong resemblance to what Cisco is trying to do. As it is, the majority of Sun servers are likely running Oracle software now, notes Charles King of Pund-IT research.

With Sun, Oracle sales people can go to a customer and sell the database, apps, middleware, x86 or Sparc servers running Solaris, Linux or Windows Server, storage and tape backup. That's a mighty compelling offer. Oracle's only real hole now is in services.

(ring ring "Good morning, Computer Sciences Corp. Legal department? One moment, Mr. Philips.")

Time to get to work

Oracle has some work to do assuring partners that it won't play favorites to Sun hardware. More important, it needs to calm the Java and especially MySQL communities, assuming it actually wants to. Oracle's past acquisitions show a pattern of buying customer bases, not technologies. Right, BEA customers?

A lot of people think this is the end of MySQL. Given there was no mention of MySQL in the press release announcing the deal, there's good reason to be nervous. Granted, the founders forked the code and split, so they can continue right along, but there is that 100 million user base that Oracle would be stupid to ignore. So Oracle has to address the MySQL community quickly. Conveniently, there is a conference taking place in the Valley this week. I do hope someone from Oracle will be there to assure the community. If not, then Oracle has made a grave mistake.

Overall, this seems a better fit for Sun. The final price is almost exactly that of IBM's price, so why is Sun taking this and not IBM's lucre?

I have suspected that Sun scotched the deal because they realized the company would have been decimated by IBM and couldn't stomach that deal, but I never could prove it. Just a hunch, and in all honest, it is a long shot. Plus, you are talking about Big Blue vs. a company where t-shirts and jeans are standard issue right up to the VP levels.

King disagrees with my theory that Sun's hardware would have been gored by IBM, but does think that this is a better match of cultures.

"In a sense, if they are not entirely culturally attuned to one another, Sun and Oracle have a similar stance or approach to the industry," said King. "Both companies like to see themselves as industry iconoclasts, willing to say the unsayable and do the unpopular if it suits the best interests of their companies."

Still, putting the monumental egos of Ellison and Scott McNealy under the same roof is a seriously risky mix of matter and antimatter that could yield the same result. Given I live a mile from Oracle's offices, I can only hope not to be home when the blast goes off.

However, they have to get work. IBM CFO Mark Loughridge really slapped the merger hard on the IBM earnings call, pointing out these two companies have worked together for 20 years as allies and IBM is still beating their pants off. He does have a point.

Adios, Jon

So what happens to Sun CEO Jonathan Schwartz? I happen to think he's been treated in a grossly unfair way. He inherited a real mess of a company and did his best to turn around a battleship that was taking on water. One reason for the lack of respect is he was more or less picked by McNealy, instead of a public CEO search, like Yahoo did, and therefore seen as a puppet.

But he made deals McNealy could never make, like peace with Intel. I think he seriously overpaid for MySQL and perhaps put a little too much emphasis on software. The focus on GPL has gotten him nowhere. Getting Richard Stallman to like you does not sell $100,000 servers.

At this point, he's probably begun boxing up his personal effects in his office, and I can't blame him. If nothing else, he should want out. My suggestion: Facebook. Mark Zuckerberg has wrecked his reputation, perhaps irrevocably, with the dismal and unprofessional handling of well-liked CFO Gideon Yu's dismissal. Valleywag was the first site to call for his pimply head, and the call will likely get louder. The parade of executives that have left Facebook is a mile long and an indication of a major problem that stems from the top.

So if Zuckerberg finally goes, Schwartz wouldn't be a bad replacement, although given Zuckerberg's behavior, even I would be a better choice, and I never managed more than a half dozen ornery freelancers.

Really, anyone be an improvement, but in chatting with Jon, I've come to realize he's a true believer in the Web platform, which makes him the wrong guy to run a hardware company but ideal for Facebook, where he would probably have a whole lot of new ideas to bring to the table.

I've been through more than one merger, including one that cost me a job, so I know the stresses the folks at Sun are under right now. To all my friends and contacts at Sun, I hope to see you all at JavaOne in two months.