SiliconBeat

If you missed it, over the weekend we ran my look at Hewlett-Packard’s massive job cuts over the past decade: 75,505.

I have a few other stray thoughts that didn’t make it into the main story. And a few questions I want to follow up on in the coming weeks.

First, the stray thoughts.

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What is it with those demonic sheep?

IBM rolled out a new line of Unix server systems under the Power 7 nameplate on Monday. Analysts said IBM appears to be positioning the new machines as a counter to Oracle CEO Larry Ellison’s ambitious plans for selling high-end Sparc servers from newly acquired Sun Microsystems.

Both companies are angling to sell powerful (and expensive) systems that combine hardware and software, engineered and optimized for specific uses such as running complex financial operations. IBM’s press release lays out all their technical specs in detail.

But IBM didn’t stop there. Ellison has been trash-talking IBM for months now, and Big Blue answered back today with a feisty Facebook page (www.facebook.com/ServersForTruth) and a YouTube video that digs at Oracle on several points, including an episode last fall when an industry standards group fined Oracle $10,000 for using the group’s name in ads that didn’t meet its rules.

The video, which IBM says it produced in-house, is a fun spoof of a typically over-heated political campaign spot. Borrowing from former Hewlett-Packard CEO Carly Fiorina and her much-discussed ad attacking rival Senate candidate Tom Campbell,  IBM even threw in a cameo appearance by a sheep with glowing red eyes.

I may not always be the biggest fan of Oracle founder Larry Ellison when it comes to issues like executive pay. But I do appreciate his business savvy and ability to cut through the fog of marketing nonsense and get right to the heart of things. I thought about this when I read his remarks from his appearance at the Churchill Club with Ed Zander.

Ellison was asked about cloud computing, and Merc reporter Brandon Bailey wrote:

“Known for his strong ego and outspoken views, Ellison drew laughter when he ridiculed the industry trend known as “cloud computing,” saying as he has before that it’s nothing more than a faddish term for the established concept of computers linked by networks. “A cloud is water vapor,” he observed.

But what really struck me is that in his remarks this week, and other recent statements like the announcement of the configured Sun database product, that Ellison is actually going to do the unthinkable: He’s going to keep the hardware business.

This shocks me for a couple of reasons.

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That $7.4 billion deal for Oracle to buy Sun Microsystems will take a little longer to win Department of Justice approval. It seems anti-trust regulators are still scrutinizing how the sale would affect Sun’s Java software platform, which is widely used by IBM and many other companies.

 Oracle, however, is doing its best to downplay any concerns. The company got out in front of the news with a press release late Friday that quoted one of its attorneys, Dan Wall:

“We’ve had a very good dialogue with the Department of Justice and we were almost able to resolve everything before the Second Request deadline,” Wall said. “All that’s left is one narrow issue about the way rights to Java are licensed …”

In slightly more neutral terms, Sun filed a report with the SEC this morning that said the DOJ had issued on Friday a “second request,” or a request for additional information on the deal. The effect of that request is to extend the DOJ review period, Sun explained, adding that it is gathering information to respond to the request.

The Obama administration has been giving a little closer scrutiny to some anti-trust issues, compared with its predecessor, according to some experts. Still, that doesn’t mean the Oracle-Sun deal won’t go through.

Wall said in his statement that the Java issue “is never going to get in the way of the deal. I fully expect that the investigation will end soon and not delay the closing of the deal this summer.”

It’s a sunny day in Silicon Valley, and still we can’t help thinking about clouds. Maybe it’s because in recent days, some big tech companies have been talking up their efforts in the business of cloud computing.

Cloud computing, in which software and services are accessed from a remote data center “cloud,” has been the focus of much industry hype. But all that talk has left many businesses uncertain about how to use the technology, as IDC analyst Frank Gens said in a recent statement. Both IBM and Hewlett-Packard clearly see this as an opportunity.

HP, which already sells hardware and software for data centers, rolled out a new package of consulting services earlier this week, including workshops and “road maps” of recommendations on design, testing and security for businesses considering the use of cloud-based services or building their own clouds for internal use.

IBM, meanwhile, announced its own portfolio of new cloud products and services just last week — including software and services that customers can access from IBM’s data centers, services based on internal clouds that IBM can build and run for its clients, and systems of hardware and software designed to work together.

Even Larry Ellison got into the discussion during Oracle’s quarterly earnings call this week, as he told analysts that Oracle is preparing to make more of its business software available on a subscription basis, to compete with companies like Salesforce.com. Ellison said Oracle will host the software on its own data centers or install it on a client’s data center, with Oracle operating it as a service.

One analyst said that sounded like Ellison was talking about cloud computing, which the Oracle CEO has famously derided in the past. Ellison did not disagree.

And if that’s not enough cloud news, some top execs from HP, Amazon, Sun and other companies were trading ideas at the GigaOM Network’s Structure 09 conference in San Francisco this week. The Register had an interesting account .

For anyone hoping to hear more details about Oracle’s plans for assimilating Sun Microsystems into its business, yesterday’s quarterly conference call with top Oracle executives may have disappointed.

Oracle CEO Larry Ellison and his lieutenants said little about the impending $7.4 billion acquisition of Sun. But analyst Tim Beyers of the Motley Fool thinks Ellison offered a strong hint that may have been aimed at reassuring those who wonder if a company known for selling software is serious about taking over Sun’s hardware business:  Ellison spent a fair amount of time boasting about the success of Exadata, the souped-up new data storage appliance that combines software and hardware from Oracle and Hewlett-Packard.

Exadata has outperformed competing products from Teradata and other companies, in trials by customers who chose to buy from Oracle, Ellison maintained. Oracle co-president Charles Phillips followed up moments later by telling analysts that Sun and Oracle customers are excited about the acquisition: “They know … that if Exadata is any indication of what happens when you optimize hardware and software together, they’re pretty excited.”

Co-president Safra Catz injected a bit of caution later in the call, after she explained that Oracle’s huge customer base helps boost company profits through recurring payments for software maintenance and upgrades. Selling hardware doesn’t usually bring the same kind of margins, she appeared to acknowledge, noting: “Obviously the Sun acquisition will change the margin story for a while, but it will improve over time.”

Analyst Peter Goldmacher of Cowen and Company sounded a similar tone in a note to investors this morning: While Oracle’s latest earnings were “impressive,” he said, “We continue to believe that Oracle’s standalone margin profile is unsustainable, and the pending acquisition/integration of Sun is going to be more challenging than the current valuation implies.”

The New York Times is reporting on its tech blog that Sun Microsystems has cancelled a long-running, but star-crossed, effort to develop a high-performance computer chip that the company once considered a key element of its turnaround strategy.

The report comes just weeks before Sun’s stockholders are scheduled to vote on a deal for the company to be acquired by Oracle, the business software giant, for $7.4 billion. A Sun spokeswoman declined comment on the report, which the Times attributed to unnamed sources.

Sun has been working on the chip, code-named “Rock,” for more than five years. The company is better known for making servers and software, although it’s had some success in recent years with other high-performance chips of its own design.

But much of the computer server industry, meanwhile, has shifted to machines built with lower-cost commodity chips from companies like Intel and AMD. Sun was hoping the Rock would help it move ahead at the high-performance end of the market, where it competes with bigger rivals such as IBM and Hewlett-Packard.

The Rock had 16 processor cores and was designed for high-end servers that would be used to crunch huge amounts of data quickly. But it reportedly suffered from development glitches that forced Sun to postpone its debut from 2008 to later this year.

During his keynote address to the audience at this year’s JavaOne conference last week, Sun Microsystems co-founder Scott McNealy took time to introduce a special guest to the stage, saying “there’s kind of a big pink elephant, uh, in the room”, according to a transcript of that portion of the talk Sun filed with the SEC.

The metaphorical elephant was none other than Read the rest of this entry »

There’s been a lot of speculation about Oracle’s intentions in buying Sun Microsystems, and whether the highly successful software company really wants to keep Sun’s hardware business going. But Larry Ellison is insisting that’s exactly what he plans.

“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,” the Oracle CEO told Reuters in an email interview. Oracle helpfully supplied a transcript in a regulatory filing with the SEC today.

Ellison’s comments amplify what he said when the $7.4 billion deal to buy Sun was announced last month. But at that time, he mostly talked about the value that he saw in Sun’s software, including Java and Solaris. While many took the deal as evidence that Oracle is now planning to sell a broad array of data center products, some skeptics have predicted Oracle would quickly unload Sun’s hardware segments — or at least the ones that have been unprofitable of late.

Oracle has only limited experience with hardware. Last year it introducted the Exadata storage appliance, which Oracle helped design and Hewlett Packard is manufacturing, using Intel chips. But Oracle said he plans to increase spending on Sun’s proprietary SPARC chips and “design advanced features into the SPARC microprocessor aimed at improving Oracle database performance.”

Ellison went on to say that he wants to keep Sun’s hardware engineers and also plans to keep selling Sun’s disk and tape storage systems, while designing new systems too.

Oh, and although those plans put Oracle in competition with HP, as well as IBM, Cisco and others, Ellison said he’s committed to Exadata and his company’s “excellent relationship with HP.”

“This is one of the toughest emails I’ve ever had to write.” Thus began this morning’s communique from Sun Microsystem’s Chief Executive Jonathan Schwartz to his troops. Fear not, though. With Dickensian flourish, Schwartz lifted up the tone of his email with his very next line: “It’s also one of the most hopeful about Sun’s future in the industry.”

Then follows a stirring paean to the 27-year old company whose board has signed off on the plan to be acquired by Oracle for $9.50 a share.

“I do not consider the announcement to be the end of the road, Read the rest of this entry »