When a giant like Oracle takes over another giant like Sun Microsystems, it gets everyone on the street talking. Most of the people were quite surprised when out of all the companies Oracle decided to take over Sun. People expected IBM, Cisco or HP to be in the race to acquire Sun and when Oracle came out as the acquirer it was a a kind of shocker. Reading an article in the Economist about the strategy behind the deal, I decided to re-collect the major points behind the acquisition.

• Company Culture following the CEO Mr Larry Ellison – Oracle has acquired more than 50 companies since 2005 at the cost of around $30 billion. Mr Ellison has a strategy to grow Oracle through acquisitions and Sun Microsystems looked like an opportunity to him.
• Sun’s Software Abilities, namely Java, Solaris (and MySQL) – Java is a wonderful programming language which works across operating systems. With the recent development of most phone applications in Java its use has expanded further. Sun could never make money from it but probably Oracle can. Solaris, the highly reliable operating system by Sun Microsystems, is the preferred OS to run Oracle databases. Lastly, MySQL is a free open source database under Sun and how will Oracle deal with it is unknown. Oracle just might want to get rid of it to further lower the competition.
• Creating a systems company with integrated hardware and software - With control over both Solaris and Oracle database system, Oracle will be able to give a perfect end to end solution to its customers. Sun Microsystems brings to Oracle expertise in systems and hardware servers.
• Defence Mechanism against IBM – In the past few years each industry layer has been controled by a different company. Oracle has been a player in the database market like Cisco is in networking gear. In the current environment, customers want end to end solutions and thus companies are acquiring other companies and capabilities. Cisco will now enter the server segment as well. Similarly by acquiring Sun Microsystems, Oracle will further increase its capabilities and also play a defence against IBM which could have acquired Sun.
• Becoming an Open Source Giant – By acquiring Sun Microsystems Oracle has become the world’s largest open source company. Will Oracle actually use these capabilities is to be seen but Oracle will get more market recognition and support from Open Source community for this.
• Synergies between the companies – The synergy between Oracle and Sun will greatly enhance the deal’s value. There are going to be job losses but ultimately Sun Microsystems is expected to make big contributions to the bottom line at Oracle.

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