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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."
You see, Ballmer was supposed to get up at 3am and bid $7,400,000,001.00 for Sun on CorporateBay.com. Instead he just threw a chair at his alarm clock and went back to sleep.
Same thing happened to me with a $1.5 thousand Rickenbacker 4003 bass two weeks ago. And now I regret not having that sweet sweet axe in my hands right now just as much as Ballmer regrets not being able to fire whole divisions when their managers don't know the entire lyrics to American Pie by Don McLean. We're both only human, buddy.
My work here is dung.
I can really decide if I like the fact that Oracle is going to be bullying Microsoft going forward or hate the fact that Oracle is probably more evil than Microsoft now.
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.
That Ballmer had no prepared spin is amazing.
...developers, developers, developers, developers.....ahhhhhhh!!!!!!!!!!!!!!!!!!
There was an article published online several months ago explaining why Oracle and Sun were a good fit. All of Oracle's application server architecture is built around Java. J2EE rules the Oracle roost. Oracle will pull the plug on selling servers, they wanted Java and Solaris. Solaris gives them SIGNIFICANT leverage over Redhat when working deals for large installs of Oracle. They can bundle a complete solution, even down to the hardware and lock EVERYONE else out of big deals.
Lots of analysts saw this as a possible deal, and McNealy was extremely arrogant in walking away from IBM so you had to figure something was up.
Sounds like the brass at Microsoft is suffering brain drain of its own. I bet Schmidt over at Google already knew exactly what was going to happen.
Old and slow Ballmer.... old and slow...
Does this give Oracle the ability to offer total package "solutions" to their customers? Do they no longer need to go into a meeting with a potential or existing customer with a preferred hardware vendor at their side to make a co-deal? IMO this gives a lot of power to Oracle and sets up against each other two massive players in the development market.
I'm surprised that Microsoft didn't bid on Sun. I would speculate that they would want Sun for the MySql and Java markets. Had they bid and won they would control a vast proportion of the development market, from Database through to front-end, and over the next release or two of Visual Studio could unify Java and C#. As for the hardware, they could have spun it off to an interested party at an attractive price. IMO since Bill Gates left there's been a vision vacuum and the company is scrambling to find it's path through brute force instead of innovation and this is why they didn't entertain an offer.
I'm as surprised as he. I still can't believe it. It won't be real for me until Taco posts the dupe here on /.
I know that was made as a joke, but how can someone who should have their head screwed on as well as Ballmer, at least when it comes to IT business, not have suspected that Oracle would be in play for Sun?
I mean, when I heard the news on the radio the other day, I said to my wife-to-be (yes, true, I have a fiancee; I'm an atypical nerd that has managed to develop a few social skills), "I saw *that* coming." Who else would be big enough to buy Sun, and an appropriate fit? You can count the number of companies in that class on two hands, tops. If Ballmer didn't have his corporate spies working on it, then he's lost his touch.
Or ... maybe it's disinformation from MS.
Oracle buying Sun -- the question is not whether this is a surprise, but why it didn't happen long before now. And, importantly, if the FTC will block it on the grounds that it would create too close to a monopoly in the DB market.
Put my fist through my alarm clock with its ding-dong death inside my ear. - The Blackjacks.
anyone who doesn't know all the lyrics to American Pie deserves to be shot.
Shot...with a cannon...
...That fires chairs.
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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.
I guess IBM must be regretting
I don't think so, since they indicated that after deeper examination and further consideration, they weren't interested in Sun at any price.
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"I saw *that* coming."
I remember reading either comments or journals about that here that Oracle would be a good fit for buying Sun. So how is that slashdotters, slashdotters FFS!, could see this coming but Balmer couldn't. He should either fire himself or start reading the frontpage. At -1.
If brevity is the soul of wit, then how does one explain Twitter?
I can think of several reasons why Oracle wants Sun:
1. Oracle is heavily invested in Java, it's future development would be a serious concern for them.
2. Oracle wants the whole stack, from hardware to data. IBM already has it, and Sun way trying to get it when they bought MySQL. Buying Sun gives them a proven, reliable hardware platform and operating system that they've already invested quite a bit into supporting.
3. Oracle needs to expand their product line beyond just the database to continue to grow. There is more growth potential in the rest of the datacenter than there is in database software.
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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."
No... "definitive agreement" means that bidding is done.
Oracle offered, Sun accepted.
"all reports I've read in the press indicate that Oracle has been handling the mergers very well."
*cough*peoplesoft fiasco*cough*
I'm talking post merger. Merger might not be the right word in that case. It was pretty much a hostile takeover with Peoplesoft kicking and screaming as well as legal battles to get it done.
But a year after the Oracle Peoplesoft merger things seemed to be going smoothly.
Even now, years later, while they've been working on consolidating the PeopleSoft and JD Edwards products, they haven't abandoned support for the legacy systems people are using.
Dual Opteron < $600
But Sun does. And, you know, all those people who work for Sun and constitute that experience are, when the deal is complete, Oracle employees, Oracle just needs to keep them and leverage their experience. This isn't entirely unheard of in acquisitions -- you acquire a firm that has experience you want, and then keep the people with the experience in a position to make use of it. Its not always just about acquiring an IP portfolio. Heck, sometimes its as much about acquiring the people and their experience as the IP portfolio. Two notable examples of this are acquisitions of Steve Jobs-run firms -- Apple's acquisition of NeXT and Disney's acquisition of Pixar.
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
The reason Ballmer was speechless is he forgot Oracle was still around or was suprised Oracle had that kind of money. Take your pick...
-=[ Who Is John Galt? ]=-
True, but he IS one of the few CEOs that has his own usenet newsgroup: alt.balmer.developers.developers.developers!
I've abandoned my search for truth; now I'm just looking for some useful delusions.
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.
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.
Of course your comment assumes the concept of "maximum bid" does not exist. If you have to bid more than your maximum bid to win, then it wasn't your maximum bid--it doesn't matter whether the other party is rational or not. You seem to be implying that the only way to win against an irrational counter bid is with a larger, also irrational bid.
Not quite.
Lets suppose his rational absolute maximum bid is $100, and he is immune from the excitement psychology that compels people to start increasing their maximum as the counter runs out.
For the sake of argument lets say I am one of those irrational twits who bids things up at the end beyond my maximum price to win. (I'm not.)
Lets also say I'm the current high bidder at $60.00, with a maximum of $80, with 1hour to go.
His rational and optimal bidding strategy is to bid his maximum of $100 in the final seconds of the auction.
Here's why:
If he waits and bids in the final seconds, his $100 will exceed my $80, and he'll become the top bidder at $82.00 and then the auction ends. And he wins at $85.
If he bids immediately, with an hour to go; his $100 will exceed my $80, and he'll become the top bidder at $85, I'll get notified that I've been outbid, and then log in to ebay... I'll see it sitting there at $85, and the pschychological need to win takes hold... so I up my maximum.
I bid $92, but that's not enough, and he still has high bid at $97. And I give up. He still wins, but he's paying $97 instead of $85. Bidding early cost him $12.
Or... I don't give up, and raise my max another $12.. $102. Now I'm back on top at $102. And he loses. Bidding early cost him the auction.
This is why I hate ebay. Its *designed* in such a way that the *optimal* bidding strategy is to try and snipe the auction at the last second. Its just stupid. And it costs the sellers because they aren't getting the best prices (and therefore it even costs ebay fees). Sellers should have the option of creating a 'rolling auction' where each time a bid is placed the auction close is reset a day into the future or maybe 8 hours ... I dunno whatever. Then sniping becomes a much weaker strategy because even if you bid at the last second everyone else has a reasonable period of time to re-consider their bids.