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."

Comments

I Feel His Pain

[eldavojohn]

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.

Is this good?

[nicolas.kassis]

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.

Re:Is this good?

[rackserverdeals]

Oracle has always been bullying Microsoft.

Larry Ellison want's to create the world's largest software company and dethrone MS. He's tried everything including support for nettops.

Considering MS gained dominance through an operating system and an office suite, what Ellison did with just a database is quite remarkable.

They have since grown their software portfolio to include enterprise applications, application servers and middleware.

Now with Sun, their getting an OS, a great development platform and a lot of other nice things in addition to the hardware business.

Oracle's revenue after the Sun acquisition should be close to Microsoft's and close to half of IBM and HP's.

Sun was only about a quarter of the size of IBM and HP, it's two biggest competitors and wasn't doing too bad considering who they were up against. And like I said, Oracle wasn't too shabby in the software world.

The combination of the two, if done properly, should really be fierce. Oracle has been buying a lot of companies in the past few years and all reports I've read in the press indicate that Oracle has been handling the mergers very well.

I thought Cisco would have been the ideal buyer for Sun and I didn't even consider Oracle. Now that the merger has been announced and I had time to think about it, I couldn't think of a much better buyer of Sun.

The two companies have so much in common. People that deploy Oracle tend to do it on Solaris/SPARC more than any other platform and that's been the case for a long time. So the companies have had a strong relationship over the years. Not always great, but overall pretty good. The big knock was when Ellison decided to switch developer workstations to Linux from Solaris, which may not have been a good idea since Solaris/SPARC deployments still beat linux deployments for Oracle.

Here you have two CEO's that hate MS, and want to dominate IBM. We're in for some interesting times.

While I don't hate Linux, the linux fanbois on here have been getting on my nerves so let me throw in this barb.

When IBM was rumored to be in talks with Sun, rumors were going around that Oracle was looking to buy RedHat.

When the opportunity to buy Sun, Oracle chose them over RedHat. RedHat wouls probably have cost them only $2bln compared to the $5.6bln it's going to cost to buy Sun. So suck it! :)

Re:Is this good?

[rackserverdeals]

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.

IBM plays hardball?

[twidarkling]

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.

OH yes..

[RulerOf]

anyone who doesn't know all the lyrics to American Pie deserves to be shot.

Shot...with a cannon...

...That fires chairs.

Re:Total Package from Oracle and Why MS Didn't Bit

[gmaney]

They didn't bid because Microsoft and Sun would be in antitrust hell forever.

It's not that surprising

[MikeRT]

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.

Uh, no

[afabbro]

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.

Re:I still can't believe it...

[Shadow Wrought]

"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.

Several months ago?

[PCM2]

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.

Re:Well they've got a lot of nerve

[Locke2005]

True, but he IS one of the few CEOs that has his own usenet newsgroup: alt.balmer.developers.developers.developers!

No Need to Regret Not Buying Sun

[reporter]

Ballmer at Microsoft need not regret that he lost the chance to buy Sun. $7.4 billion is too much for a company like Sun. The only reason that Ellison at Oracle would shell out that kind of money is that McNealy at Sun is his personal friend.

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.