Last month, we laid out Oracle's servers in a Buyer's Guide, our first complete rundown of all Oracle servers since the Sun Microsystems acquisition. Now, we'll follow up with a look at the customer side: How users are perceiving Oracle, where they consider the company is doing well and where they are less than satisfied. This is meant to give potential buyers some idea of where the company remains strong on the server side and where there may be room for improvement or concern.
The one thing about Oracle (NASDAQ: ORCL) operating in the server space is that it can't be accused of being boring. The recent kerfuffle over the Intel Itanium processor is a case in point. The company set the fur flying when it announced its software would no longer support Itanium, as Oracle said it was near end-of-life.
"One of the biggest bombshells to hit the server business in recent memory happened in late March when Oracle announced that they would no longer port new versions of their software to Intel's Itanium processor," said Dan Olds, principal at Gabriel Consulting Group (GCG) of Beaverton, Ore. "HP is the highest-profile system vendor affected by this move, since their Unix variant (HP-UX), NonStop, and OpenVMS operating systems depend on Itanium-based servers."
Both Intel and HP quickly denied these claims. One theory behind the move is that Oracle is forcing users of its software off HP and onto Oracle hardware, exclusively.
"With their purchase of Sun, Oracle is now a head-to-head competitor with former partners IBM, HP, Dell and other server vendors," said Olds. "Oracle, as a major ISV and system vendor, could potentially use its power as a key software provider to give unique advantages to its own hardware products while disadvantaging competitors."
But how has the dispute affected end users? GCG conducted a survey that delved into this side of the equation. Out of 450 respondents, 94 percent had some Oracle products on site. More than 80 percent had an Oracle database, and more than 50 percent had Solaris OS and Oracle apps running. Only 29 percent, however, accepted Oracle's version of the truth. Almost two-thirds, on the other hand, believe Oracle will use this situation to raise license/support costs for Itanium customers. Of those surveyed, 77 percent thought the real reason was to kill HP Itanium server products. A whopping 79 percent thought the move was the first step in Oracle's master plan to put all competitors at a disadvantage when its offerings were compared to Oracle's hardware products.
"If Oracle software isn't available on these systems, the workload would migrate to Oracle's Solaris Unix variant," said Olds.
He sees a negative in this for Oracle. Respondents do as well; 65 percent of those surveyed expressed that their opinion of Oracle had changed for the worst in recent months.
So what are these customers doing about it?
Few JD Edwards Enterprise Resource Planning (ERP) customers are planning to move to another platform, but they are the exception. Nearly one-third of PeopleSoft, 42 percent of Siebel, 37 percent of Oracle application, 39 percent of Oracle database and 51 percent of Solaris/Oracle Linux customers, however, are evaluating other options or planning to migrate.
"They probably aren't going to lose 51 percent of their OS base, but a significant portion is certainly at risk," said Olds.
Gunning for Competitors
Most of those surveyed don't see Oracle trying to do the dirty - at least for now - on its Mirosoft base. However, Red Hat Linux was regarded as Oracle's next target of opportunity in the near term, with IBM a potential target later down the line.
"More than 60 percent believe that Oracle will take steps to drive up costs for non-Oracle Linux customers," said Olds.
IBM, of course, competes with Oracle in a number of different areas these days. It is the leading Unix systems vendor with its Power line. About 50 percent think Oracle will eventually withdraw support for these IBM systems.
The end game may be top-to-bottom IT domination, similar to the way IBM operated in the 1970s and 1980s.
"85 percent see Oracle pulling out all the stops in order to get customers to move to an all-Oracle stack," said Olds.
If so, that means a lot of potential sales for Sun SPARC and SunFire systems. Oracle is tailoring its servers to address specific workloads, and it is steadily prepackaging more and more software to run within these Sun boxes.
"The question is, will Oracle's current and upcoming prepackaged systems appeal to a broad enough market to make it profitable to Oracle," said Olds. "If customers decide to jump on Oracle's integrated offerings, they're giving up flexibility and some level of control over their IT."
When asked whether the performance and cost of these Oracle systems is a worthwhile trade, Olds said he believes the answer is no, judging by Oracle system sales and market share, compared to IBM, HP and Dell.
It seems likely that Oracle will concede the commodity box space to HP and Dell. Sun wasn't exactly a major player in that line, so that is hardly a surprise.
"It's a safe bet that Oracle will continue to exit the low-end commodity segment of the market, ceding it to Dell and HP. But it's not that big a sacrifice, given that Sun didn't make a lot of progress in that space when they were independent."
Similarly, Sun's x86 products, which go under the SunFire banner, are no longer going to be viewed as a way to grow its x86 share of the pie. Rather, look for certain boxes to be big sellers when paired with a specific application or included within an appliance Oracle brings to market. But in terms of big picture, it seems unlikely Oracle will put much effort into selling servers head to head with the big three.
"Given their volume, Oracle won't be able to compete on price for commodity server sales. They're going to have to put together bundles of hardware, software, operating environments (Solaris x64, Oracle Linux) and maybe even services that are compelling enough to convince customers that they're getting a better deal," said Olds. "This can be in terms of overall business function (throughput), availability/reliability, or ease of monitoring and management - probably a mixture of all three."
For its SPARC line, however, it could be that Oracle sees a major opportunity to back HP and IBM into a corner and tempt users away from their hardware if they want to taste the riches of the Oracle software arsenal.
Drew Robb is a freelance writer specializing in technology and engineering. Currently living in California, he is originally from Scotland, where he received a degree in geology and geography from the University of Strathclyde. He is the author of Server Disk Management in a Windows Environment (CRC Press).