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Ballmer, IBM Surprised By Oracle-Sun Deal
Geon Lasli writes "Reporters caught up with Microsoft CEO Steve Ballmer in Moscow to get his take on Oracle's deal to buy Sun Microsystems for US$7.4 billion. Ballmer was at a loss for words: 'I need to think about it. I am very surprised.'
According to a source, IBM hadn't given up on purchasing Sun and was blindsided by Oracle's move. I guess IBM must be regretting playing tough 2 weeks ago. Unknown to outsiders, Sun had probably found the Oracle lifeboat before they decided to pull the plug on the deal."
Aww, poor IBM. This is why you don't withdraw bids, you ask for counter-offers. Otherwise, you get blindsided by someone willing to do some give and take. This is probably the best outcome though. Microsoft didn't need another addition to their roster of stuff they've co-opted, and IBM should be doing more development instead of acquisitions.
Canada: The US's more awesome sibling.
If they feel the company is worth more than Oracle are paying, they could make a counter offer. Indeed, Sun's board may have announced the agreement in the very hope this happens.
Equally, in those circumstances Oracle could increase their offer. Unless IBM are very keen on the acquisition, it's unlikely they'll want to enter a bidding war.
Not to say they won't have a final stab, especially if Sun is worth more to them now they know the alternative is for Oracle to own Java.
They didn't bid because Microsoft and Sun would be in antitrust hell forever.
They're the "number 2 software company," but they didn't have anything like the JDK or a real OS to call their own. Now they have Java, Solaris and MySQL, plus they have access to all of Sun's customers.
Many of my customers would have loved to see this go through because then they could buy an entire package from a single company, and it'd probably be cheaper. Systems integration costs a lot of money, and if Oracle can streamline this down to the point where a lot less labor is needed to deliver and configure an enterprise setup, then they'll succeed handsomely.
I've also seen a lot of people bring up MySQL as an issue, but I bet Oracle actually wanted MySQL. Oracle's DB and MySQL don't compete in most areas, and MySQL can be an excellent rear guard product used to keep SQL Server and PostgreSQL at bay. Oracle has a huge services arm, so it's only natural that they will be able to find a way to fit MySQL into many configurations where Oracle DB would not be as good of a fit.
IBM saved themselves another Rolm disaster. If they'd bought Sun, they'd have to write down 80% of it within five years.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Months ago? Lots of analysts? Hmmm. I think maybe it's easier to "foresee" this type of stuff in hindsight.
Not to toot my own horn, but I predicted Oracle would buy Sun before the deal was announced -- but I didn't do it months ago. I didn't hear anyone else talking about it months ago, either. And when I made the prediction, the consensus here on Slashdot seemed to be that it was a terrible idea. So if you can point to some references from months ago I'd love to see them. I don't think anybody was really even thinking much about Oracle/Sun before the talks with IBM made the news -- I know I wasn't -- especially considering that Sun had consistently maintained that it was doing fine and didn't need any help from anybody.
So it doesn't completely surprise me that Ballmer didn't see this coming -- though maybe he's not as shocked as he's pretending to be. By acting surprised, he makes it sound like he wouldn't have made this deal himself, which makes it sound like he might not think the deal is a good idea, which is a totally self-serving position for Microsoft to take.
It does seem a little strange that IBM is acting surprised, though. By all accounts they had exclusive rights to negotiate with Sun for a set period of time, and they let that period elapse. What did they expect? Maybe they didn't believe Sun would be able to leave the table and arrive at a firm deal with a different suitor so quickly, but that seems a little foolish on their part, if it's true.
Breakfast served all day!
I didn't see it coming, but I'm a bit dissapointed with myself for that.
In hindsight, it's the obvious choice.
Who is Oracle's biggest Competitor? IBM.
What is Oracle lacking when it goes head to head with IBM? Hardware.
When a customer says "we're going with IBM because they can deliver a whole solution" Oracle can now say "So can we!".
Dual Opteron < $600
This statement:
Perhaps you didn't mean to compare DB2 to MySQL, but saying MySQL would serve the same place in the product lineup is deeply silly, at best.
Old and slow Ballmer.... old and slow...
Oh please. Yeah, there were people who predicted this. There were also people who predicted that Sun would go to Apple, Lenovo, or Acer. It wouldn't surprise me if somebody predicted that SourceForge would buy it for the sole purpose of upgrading Slashdot's hardware!
There are so many BS predictions out there, it's darned easy to miss the ones that actually make sense. Everybody I know was caught flatfooted by this. There are lots of good reasons to think that Oracle couldn't or wouldn't buy Sun: their partnership with HP, the difficulty of borrowing money right now (IBM was going to use its cash reserves, which isn't an option for Oracle), and the difficulty Oracle will have maintaining good relationships with the hardware companies it depends on — which are now its competitors.
Hindsight is always 100% accurate. So what?
You can't really buy what Redhat has worked to gain over the years.
Yeah you can. It's a publicly traded company. You don't even need their permission to buy it.
And it would only cost you $3.3 billion - the $1 billion in cash and short term investments you'd acquire when you did. But $2.3 billion for a company with only a half billion in annual revenues, 76 million in annual net income (with no income growth despite dramatic revenue growth) doesn't seem worth it.
It's not that you can't buy RedHat. You don't want to.
You can't buy Linux, but you sure as hell can buy RedHat and the developers won't be jumping ship. Especially in this economic climate where raising money for a RedHat fork that can compete with the RedHat brand isn't likely.
And you sure as hell can sell RedHat as a lot of insiders have been doing lately. If you can sell something, you can buy it.
Dual Opteron < $600
If you choose not to decide, you still have made a choice.
Allow me to explain.
The bulk of Sun's revenue comes from SPARC-based servers. Sun simply cannot afford to develop further SPARC processors -- including the so-called chip-multiprocessor ones like Niagara. Why? Sun lost the workstation market on the desktop to Intel. The last SPARC-based workstation used the UltraSPARC III, and sales of this workstation were discontinued after 2007. Look at Sun's web site. The sales of SPARC-based workstations are finished.
Without the economies of scale from selling hundreds of thousands of SPARC chips in hundreds of thousands of workstations, Sun cannot afford to develop the SPARC processor any more.
Without SPARC processors, most Sun's servers would disappear, and so would the bulk of its revenue. Sun could continue selling Fujitsu-designed SPARC systems, but Sun's profit margins on those are small.
Basically, Oracle will terminate the hardware business at Sun. In other words, Oracle paid $7.4 billion only for the software business of Sun. $7.4 billion is too much for such a miniscule part of Sun. Software brings little revenue (or profits) to Sun.