Oracle’s acquisition of Sun to reshape IT industry

by Editor 4/27/2009 4:24:00 PM
Oracle’s acquisition of Sun Microsystems is likely to reshape the technology sector and put the software company into a much more prominent position in both the hardware and software markets, say analysts.

Oracle purchased Sun in a $7.1 billion deal after Sun’s talks with IBM had fallen through. As a result of the acquisition, Oracle will become the No. 2 player, ahead of Hewlett-Packard and second only to IBM, in the market for Unix computers, utilized in corporate data centres. The deal will also give the software giant control of the widely used Java software, as well as the Solaris OS for Unix servers.

Howard Anderson, former chief executive of the Yankee Group and a lecturer at the MIT Entrepreneurship Center, says: “This is a competitor that is much more formidable than Sun standing alone. If I were a Sun customer I was starting to get nervous about Sun. I was worried about their viability. I’m not worried about that anymore. I know that Oracle is going to be there.”

Toni Sacconaghi, analyst at Sanford Bernstein, predicts that Oracle will need to cut another 5,500 to 10,000 jobs once it takes over Sun. Other analysts say that Oracle will cut Sun’s cost structure and revitalize the company that reported a loss of $1.9 billion in the first half of its current fiscal year.

Laura DiDio, an analyst with consulting firm ITIC, says: “Across the board, this puts Oracle on much more of a competitive footing against IBM and HP. This puts them on an even footing from disk to databases, and everything in between.”

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