Sun & Oracle: good for government?

Sunday, 5 February 2012

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By James Smith | 24 April 2009 | Permanent link | 0 comments

Oracle has snapped up Sun, regulators permitting, for the equivalent of US$5.6 billion. But although the deal is done, there seems to be some kind of confusion as to the ramifications for public sector agencies.

Of course this isn’t the first time a vendor has acquired another, and it won’t be the last. But Sun is not your run-of-the-mill vendor. It exudes a nostalgic cool amongst tech heads for its record of innovation, and more importantly for the purposes of our discussion, has an enduring footprint amongst security and defence agencies in the region on account of their security. Therefore what happens to Sun clearly matters to many public sector officials.

Despite the strength of its offering, the company has been on a slow downward spiral for some time. Just when I thought they were on the mend, along came the global downturn and a collapse in their revenues. IBM and Oracle both think they can arrest this decline, and this week came the news that Oracle was willing to put more money where its mouth was.

‘Acquired by Oracle’. The words sends shivers down the backs of some buyers of IT, and industry commentators: “There are growing concerns that vendors can hold public sector agencies to ransom on price,” says Steve Hodgkinson, Research Director, public sector IT, Ovum. “Oracle has already been pushing up its server support charges, and that may continue as the company gains control of more of the market.”

I think Hodgkinson needs to get out more. There’s a recession out there - and government’s ability to dictate terms to its suppliers has never been greater. It is also a very different outcome from what might have been - Oracle and Sun are longterm partners, whose portfolio of solutions is very complementary. Contrast this with IBM and Sun, where there’s substantial product overlap, and the scope for industry consolidation, and a consequent reduction in choice, is greater.

I’m on record as thinking that IBM and Sun would have made an amazing combination, giving Big Blue a near armlock on servers and ultimately the cloud, and accelerating standardisation. Well that’s no longer going to happen. But I believe that a stronger Sun in a bigger Oracle, squaring up to IBM, HP, Microsoft and the rest, is as positive an outcome as could be hoped for from the public sector perspective.