Oracle will keep Sun's hardware business

WHEN ORACLE announced its surprise purchase of Sun Microsystems last month, most observers assumed that the software company would sell off, wind down or abandon Sun's hardware business including its signature lines of Sparc chips and servers.

However, in an interview filed with the US Securities and Exchange Commission and posted on Oracle's website yesterday, CEO Larry Ellison declared that the company will keep Sun's hardware division.

"We are definitely not going to exit the hardware business," Ellison said, adding that he sees opportunities in hardware for Oracle.

He explained, "While most hardware businesses are low-margin, companies like Apple and Cisco enjoy very high margins because they do a good job of designing their hardware and software to work together. If a company designs both hardware and software, it can build much better systems than if they only design the software. That's why Apple's iPhone is so much better than Microsoft phones."

Oracle's intention is to sell integrated systems for which it will design and build both hardware and software. Oracle already has significant software product lines that it offers customers in its databases, middleware and enterprise applications, so the addition of Sun's hardware, Solaris Unix operating system and Java to Oracle's portfolio undoubtedly should worry the other large enterprise IT vendors such as IBM and HP.

"Once we own Sun we're going to increase the investment in Sparc. We think designing our own chips is very, very important. Even Apple is designing its own chips these days," Ellison continued.

"Right now, Sparc chips do some things better than Intel chips and vice-versa. For example, Sparc is much more energy efficient than Intel while delivering the same performance on a per socket basis," he said. "Sparc machines are much less expensive to run than Intel machines."

Ellison also said Oracle wants to continue Sun's partnership with Fujitsu, which contributes to Sparc development and sells its own line of Sparc servers. µ

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