Oracle Shakes the Eco-System

Since the announcement of Oracle to acquire Sun Microsystems you can find a lot of thoughts on the web about Oracle’s main motivation behind the deal, the portfolio mapping of the two giants and how Oracle would leverage pieces of the new assets or possibly sell-off some again.

Please read this Forrester Report for more insights.

 

Oracle continues to assure they are not planning to depart from any of their new assets. If we believe in this mantra the consequences to the whole IT eco-system are severe. It is the first time that a large application vendor expands into the hardware territory and forces us to redefine the traditional view of IT market segmentation – again.

 

·        Changing IT Markets Force Everyone to Rethink

Consolidation of market segments is not new to the IT world – no other industry faces similar dynamics with new markets and new players coming to the game and others that quickly disappear. When the increasing complexity of the application world opened a new market for middleware, new specialized vendors entered the floor and flourished for several years until large application companies grabbed that market and incorporated it into their own portfolio. The goal to provide end-to-end solutions and completely integrated stacks was the motivation on the banner of consolidation. Many middleware vendors quickly disappeared from the show and the battle of IT platforms emerged with dramatic consequences for the surrounding eco-system. Service providers, ISVs and end-users ponder about the right platform decision and often swallow increased cost not to get locked onto a specific vendor platform as long as the battle continues. The dust of the platform battlefield has not yet settled when Oracle opens a new fight and eco-system players again have to rethink their position.

 

·        Partners Need to Plan Their Moves

The Sun acquisition by Oracle is very similar in regard of market consolidation as compared to the middleware example, but of different quality in size and consequences. Following the new IT Partnership Taxonomy by Peter O’Neill here is what existing partners of Oracle should consider:

 

o       Technology partners have to prepare for battle

For now, Oracle will want to continue existing partnerships with other technology / hardware vendors. But for how long will the coopetition be fruitful for both sides? Dedicated hardware vendors will have to make good use of a transition period: (re)-negotiate partnering terms with Oracle, test the waters for alternatives and more important – avoid being locked and expand the portfolio towards services and applications in the longer run.

 

o       Solution partners will find partnering easier

With the additional Sun assets Oracle also expands the portfolio of supported standards in many directions. There will always be white spaces to partner with Oracle and adhering to a broadening spectrum of standards can significantly cut the cost for complementary solutions.

 

o       Implementation partners will find a friend and loose some business

Dealing with less partners in order to offer end-to-end services is always a good thing and service partners will look forward to even stronger engage with Oracle. However, with a higher degree of pre-build integration by Oracle between hardware and software some business opportunities will dilute over time.

 

·        And What Does it Mean for Oracle’s Competition?

Answering this question will go well beyond the focus of this blog, but stay tuned for more research from Forrester on this topic. It would not be the first time for other application vendors to follow into Oracle’s acquisition steps. Watch out who will do the next step!

 

How do you see the impact of the Oracle / Sun deal on the Partner Eco-System? Please leave a comment or contact me directly.

 

Kind regards,

Holger

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