Hewlett-Packard (HP) could lose a large chunk of business it owned through its alliance with Oracle, now that the software business has become an instant competitor.
The companies have been in a strategic alliance for over 25 years. The alliance boasts a joint customer base of over 100 000 businesses that run Oracle solutions on top of HP tin.
Early this week, Oracle made a surprise announcement, saying it had signed a binding agreement to buy Sun Microsystems for $7.4 billion. The global industry was stunned, as it is the first time a software business has bought out a hardware vendor.
While HP has a significant software stack, including some of the more popular open source applications like MySQL and Java, speculation around what Oracle plans to do with the hardware business has been rife.
Hardware stays
Local Sun partner, Bytes Technology Group, this week received a notice from Sun explaining what Oracle hopes to achieve through its Sun acquisition.
“Oracle plans to engineer and deliver an integrated system - applications to disk - where all pieces fit and work together so customers do not have to do it themselves. Customers are expected to benefit as their systems integration costs go down, while system performance, reliability and security go up,” explained Peter Ryan, executive VP of global sales and services at Sun.
The letter goes on to say that Sun SPARC servers are the leading platform for the Oracle database and will still be carried to market.
Instant competition
According to international research firm Garner, the Sun, Oracle marriage places the software firm into almost direct competition with HP, the company it has partnered with for a quarter century.
“[The acquisition] will bring about a major change in IT market alignment by giving Oracle the opportunity to become a powerhouse vendor in both software and hardware, potentially rivalling IBM and HP,” says Gartner.
Despite this, HP says it is unconcerned about the acquisition: “Oracle and HP have been strong partners for many years. HP will continue to provide Oracle software customers with the best HP storage, servers, outsourcing and service solutions in the marketplace. We look forward to strengthening our already strong partnership.”
HP has strong margins even without Oracle, but the possible migration of 100 000 customers to Sun servers cannot be an exciting proposition for the company.
A full description on what is offered under the HP, Oracle alliance can be found here.
Don't worry
HP quotes Probit research saying more Oracle customers use HP servers than any other brand.
“Oracle recommends more HP Storage Linux configurations and HP provides more maximum availability solutions with Oracle than any other vendor. HP Software also offers the number one heterogeneous management and automation software suite for Oracle, Solaris and Java. HP, through its EDS business, is one of Sun's largest customers, the largest buyer of Sun hardware and software maintenance, and manages more Sun servers than any other vendor,” it goes on to say.
While the immediate impact may not be of concern to HP, there could be far-reaching implications when enterprise customers choose to undergo a technology refresh.
Gartner says the partnership creates new opportunities for Oracle customers. With Oracle confirming it will support Solaris on SPARC, Gartner says Oracle is in a unique position to use tech refresh to renew customers ”through new Sun platforms and help dissuade customers from moving to HP or IBM”.
The bigger advantages for Oracle solutions comes through the acquisition of Sun's x86 server racks and blade servers, which have become a popular enterprise product, notes Gartner.
Local Oracle partner EOH declined to comment on the percentage sales of Oracle applications on HP hardware over Sun hardware.
Sun partner, Bytes, is clearly pleased with the future possibilities, since it inherits a partnership with Oracle. “The clear and exciting synergy that exists between Bytes, Sun and Oracle offers great opportunities," says Mark Neethling, divisional manager for software integration at Bytes.
Neither Datacentrix, an HP partner, nor Dimension Data, a Sun partner, were available for comment at the time of publication.
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