The Eagle Blog

The Oracle Juggernaut Buys Sun!

The rumour mill has been rampant around the sale of Sun Microsystems, but the front runner through the process has always been IBM. Even when their first offer was rejected the “buzz” was that IBM was trying to get Sun for the best possible price and surely a compromise would be reached. Seemingly from nowhere, which shows how good Oracle is at keeping a secret, Larry Ellison’s company paid $7.4 Billion to buy Sun.

I read an article today that suggests Steve Ballmer from Microsoft was having trouble understanding why Oracle would buy Sun … I’m guessing that he’s just playing head games with Larry Ellison!

To me there are at least three reasons why Oracle bought Sun …

The first reason is the same reason that they have bought Siebel, BEA, Peoplesoft, Hyperion and in fact a total of more than 50 companies since 2005 … because they want to be a dominant player in the World. Larry Ellison has a huge ego, Oracle has been a super successful company by anyone’s evaluation and world dominance is probably a reasonable goal in Mr. Ellison’s mind!

Secondly, the trend in recent years has been the merging of hardware, software and services into one entity … with IBM as the model of success. One of the more recent examples of this was HP’s merger with EDS, bringing two of the world’s largest players together into a “full service solutions” company. I think we will see Oracle make some more strategic moves in the hardware arena to strengthen that part of its business, but ultimately clients will be able to buy an Oracle solution … end to end!

The third reason I think Oracle bought Sun was Java. Larry Ellison will want to make money from Java, it is everywhere and he will find a way to maximize his ROI from such a valuable asset.

Bets on his next acquisitions?

A browser maybe … Yahoo, Firefox?
A PDA company … RIM, Palm?
More hardware or storage … EMC?

Its fun to play the acquisition guessing game, but companies like Oracle are taking full advantage of the economic downturn to strengthen their offerings and position for super growth as the economy recovers. It will be an interesting case study for MBA students in the years to come.

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