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Black Hole SUN

“No one seems to get this, but “Black Hole Sun” is sad. But because the melody is really pretty, everyone thinks it’s almost chipper, which is ridiculous.”    – Chris Cornell , SoundGarden

Press reports say that Oracle has agreed to buy Sun for $9.50/share. This comes after the negotiations with IBM failed at an advanced stage. Now I usually do not write about corporate matters in my personal blog because clearly I wish to keep it free from mad people injecting it with unnecessary legal greenpaper with or without purpose,reason or practicality. But there are times when I feel that the thoughts are so overwhelming, its better to put it down so that something good might come out of it. That is the reason why I shared my views on the dismal state of yahoo to the readers sometime back. Now since I brought this up,just a small update,but yahoo seems to be limping back to its good days slowly. But that may or may not be a topic of a future rant. We are discussing the recent acquisition of SUN.Also I sincerely implore you to agree to THIS before you read it further. If you do not agree you must stop reading and go HERE.

SUN- According to google image search !

SUN- According to google image search !

We cannot imagine the world without the sun and I cannot imagine the IT world without SUN. Sun has been iconic with its unix and top notch server systems that power most of the major economies. Also my entire student life during my Bachelors was ridden more with SUN than it was with any other systems. SUN is so much ionic that even text books take it as a standard. And I have not even discussed its business potentials and technical specialities. Now UNIX and servers systems were not its only selling points. SUN is equally (probably more) famous to the newer generations for something called Java. The programming language in its entirety revolutionized dynamic web content and set up an industry precedence and cult following which soon exploded into mass adoptions and implementations across all devices large or small. A major mobile community thrives on Java and Java based games and applications and a modern mobile is not considered worth the money if it doesn’t support Java. So apparently they were doing well !

Not this Java you moron........

Not this Java you moron........

…Well not so ! It appears that the delicate line of competition with its immediate competitor IBM was growing thin by the day. IBM-AIX beyond all things definitely had cost advantage. I happened to work on IBM-AIX about three years back when the administrator in charge simply said that he went for it because of its cost advantage and given the current trying times it is all so more relevant. So does this mean SUN doesn’t have a cost break even also ? Its kind of hard to answer-may be , may be not- but this can be surely said that it is the impact from the past which became all so relevant in the trying times. SUN has put a lot of cost cutting measures in place but they were not enough as it seems – proof is this saga of looking out for a suitor. But for good this deal may save the company after all.

Show me the money ....

Show me the money ....

It was imperative since the days when the behemoth of investment banks, The Lehman Brothers crashed like a house of cards marking the beginning of the latest wave of recessions- that companies with challenging result orientations will soon see acquisitions or mergers if not being shut down totally. So the acquisition of  SUN was just a logical outcome of an economic function equated long back. SUN might have resisted it and who knows it might have survived as well but definitely risking to go the ‘yahoo way’ was considered a tertiary plan as well as a proven market risk for the stakeholders. So in its journey to find a suitor SUN had multiple options to proceed with the said business intent. Obviously the economically stable firms were the first and only choice in this market scenario.

IT Godzillas: Trying to eat a fat old Japanese Man for no good reason.....

IT Godzillas: Trying to eat some random fat old Japanese Man for no good reason.....

Microsoft,Apple,Cisco,IBM,Oracle and every other IT Godzillas were an automatic suitor if considered in terms of acquisition capability and YoY results. Microsoft probably stayed away because it would be a strategic monopoly on the server market and may call for anti trusts. Further Microsoft’s own Windows  Server 2008 is bold and effective enough to go where no other redmond OS has ever gone before. So strategically the acquisition of  SUN would mean absolutely nothing in terms of the Server market.One might argue that Java should have been a lucrative reason for the buyout given the past history of Microsoft Java but frankly with Dot Net platform in place and adopted whole heartedly across the industry,there is very little shine left on Java to attract Microsoft. Also having an array of very competitive and collaborative integrated server technologies at Microsoft’s  disposal it will become very difficult to convince the stakeholders about this “no-value” acquisition.

No shine, no deal

No shine, no deal

The story is a little twisted when it comes to IBM. IBM being its main competitor -after the acquisition- might have become the largest server solutions company. Additionally they get to play other technologies like Java,MySQL and Star Office/Open Office very very strategically to bring in cash in creative ways. But guess the things didn’t turn out so well and IBM chose to withdraw. Probably because once the merger was done there would be a lot of overlaps and redundancies  and  getting rid of them then will cost money and may create a PR risk. So apparently in the forseeable short term this might become a risk altogether. Also the bid and the negotiations may not have been favorable as well.  Again, corporate strategies cannot be comprehended by a regular guy like me or you.They have a dynamics of their own which takes into consideration a lot of factors like short term and long term risks, investor sentiments and top level stuff like that. That is the reason the top management in the order of directors are paid a premium so that they can steer the company through this variables. So a corporate thinktank is not that easy to understand and predict as it is with any regular Joe. Also.may be this is the same reason I never figured out why Cisco stayed out of this !

Proof: Owning a Tank never means you can think

Proof: Owning a Tank never means you can think

What I expected most was Apple to jump into the race and steal the show. Totally ignoring the cult following of  “Apple Products” and going by sheer numbers they have a good YoY result on various computing platforms like Desktop and portables. With their ultra successful foray into the mobile computing segment with the iPhone the only domain they are left to explore to its full potential would have been the server solution segment. And being a veteran of the Hardware and Software bundle business like SUN they could have hopped in and won the game. This would bolster their I’m a Mac campaign through all new angles and put them straight to the battleground with Windows Server 2008. For end users it would simply translate to better products and constructive competition in the market. Again as I have explained,Corporate thought process has to balance a lot of things and strategize for the future. So may be for likewise  reasons or future plans Apple decided to stay away. Also did it ever cross your mind that Apple might not even be interested in this particular market ?

Which part of not interested do you not understand ?

Which part of "not interested" do you not understand ?

So finally we learnt from the press reports of Oracle offering 9.50$/share for SUN. Now initially it took me sometime to understand why Oracle would be interested in this but soon enough the markers gave me a good speculative top level picture. And no, its not because Larry Ellison wants to buy everything ! (muted GRRRRRRRRR) First and foremost the acquisition may open up a window to Oracle to have an operating system of their own which they may tweak/improve as required. And given the fact that a majority of Enterprise Oracle databases are housed on the ‘nix platform, its a lifetime’s opportunity to become an end to end solutions provider.Add to that the prospect of tweaking Java in a similar manner which already is used by Oracle in diverse manners. They also have an opportunity to showcase MySQL as a low cost/free backend database for emerging CMS/Dynamic web content and use their core Oracle RDMS solution for enterprise platforms. They also have the advantage of becoming a supporter of open platforms with the adoption of Star Office suite. All in all Oracle will have new worthy competitors now in a new domain of server technologies and emerge as the next generation Solution and Service provider. Much like Microsoft and IBM. As for SUN they get to live and pass on its much appreciated genes to the future. Now whether SUN remains a separate entity or gets absorbed and rebranded as some synonym of Oracle Server Solutions is the decision of the policy makers. But what we can say right now that if the deal goes through fine, a Server product from a few years form now and henceforth will have SUN codes embedded somewhere inside. So what we see here is this particular deal if comes to completion its going to benefit both the companies in numerous ways and is going to write new rules for the future server solutions industry grounds up which may not have been possible if they acted alone. May be this is THE beginning of the new era.

Nope.... not this Oracle....

Nope.... not this Oracle....

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