When Oracle opens its vault to buy Sun Microsystems, the firm will also add operational bulk for a war with tech giants like IBM and Microsoft to capture the minds and wallets of bank execs hot for cost and functional flexibilities provided by emerging Web-enabled architectures.

 
“Sun Microsystems has fantastic assets in anything that has to do with open systems architectures,” says Guillermo Kopp, an executive director for TowerGroup. “The challenge for Oracle will be to compete effectively in the middleware space, which becomes particularly important when you get into the new world of Web 2.0 or SaaS (software as a service) applications.”


Oracle's bid is to acquire Sun Microsystems for $9.50 per share, or about $7.4 billion, in a deal that’s received unanimous approval of Sun’s board. And while it’s early, the planned acquisition has already led to a lot of buzz about the possibility of thousands of layoffs at Sun Microsystems, as well as potential clashes between the hard charging sales oriented culture of Oracle and the tech engineering bent of Sun. There’s also the possibility of future friction with rival technology firms that heavily build their software on Sun Microsystems’ Java platform, such as SAP’s business intelligence products and even some IBM software.


So far, Oracle hasn’t disclosed much about its plans beyond perfunctory public statements via press releases and a recent conference call touting the acquisition. But Oracle’s acquisition of Java should mean clients of the boatload of other tech companies acquired by Oracle over the past few years—such as PeopleSoft and iFlex, to name only two—will be able to communicate more easily with Oracle’s software. And Oracle will also be able to offer its solutions in a more modular manner, which would be attractive to institutions looking to contain costs. In the conference call, Oracle CEO Larry Ellison called Java “the most important software asset” the company has ever acquired.


“Oracle has seen the traditional delivery of applications, which is ‘sell the package to the bank, which then runs the package,’ shift to a more modular, dynamic ‘on demand’ Web based paradigm,” says Kopp. “This is a time when banks are looking to outsource or get rid of the burden of running their own infrastructure at a fixed cost. They want ‘on demand’ services, and Sun’s engineering capabilities are a good supplement to Oracle’s products.”

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