Larry Ellison doesn’t do a lot of interviews. But in a recent confab with the Reuters news service, the Oracle CEO offered up some typically unvarnished opinions about prior management at Sun Microsystems, the once-great computer-maker that had fallen on hard times when Oracle bought it for $7.4 billion earlier this year.
Though much of the interview covered familiar ground, it offered some interesting tidbits as Ellison described some of the inner workings of Sun’s operation – including what’s characterized as outdated manufacturing and distribution systems, inefficient sales commissions, wasteful spending and bad management at the very top levels.
“The underlying engineering teams are so good, but the direction they got was so astonishingly bad that even they couldn’t succeed,” Ellison said.
Ellison offered what appeared to be a sharp dig at Jonathan Schwartz, the pony-tailed CEO who ran Sun before the sale to Oracle and who was known for diligently blogging about the company’s strategy and products.
“Really great blogs do not take the place of great microprocessors. Great blogs do not replace great software,” Ellison said. “Lots and lots of blogs does not replace lots and lots of sales.”
Ellison also gave some hints about future acquisitions as he attempts to transform his hugely successful software company into a full-service purveyor of integrated data center systems. Short summary: Oracle may be looking to buy more hardware companies. “We’ll buy in all areas of our business,” Ellison said.
Perhaps not a surprise, but a sign of transition: James Gosling, the longtime Sun Microsystems software guru credited with developing the Java programming language, has resigned from Oracle just a few months after it acquired Sun.
In a blog post on Friday, Gosling wrote that he resigned on April 2. “As to why I left, it’s difficult to answer: Just about anything I could say that would be accurate and honest would do more harm than good.”
Gosling, 54, is a popular and respected computer scientist and, to many, an icon of the free-spirited early days of Silicon Valley. The bearded, long-haired Gosling favors t-shirts and jeans and always seemed to enjoy himself at Sun’s annual Java One conference, at least during the traditional opening rite in which he and other Sun execs used giant sling shots to loft souvenir t-shirts into the crowd.
Last year, when Sun was in talks to be acquired by IBM, Gosling told tech blogger Jason Stamper that there might be some interesting issues as IBM tried to integrate Sun’s free-wheeling culture with its own. “We’re definitely weirder than they are,” he said then.
As it turned out, the IBM deal fell through and Oracle swooped in. Many wondered if there might be a similar culture clash as Sun old-timers found themselves working for a company that’s definitely oriented to the bottom-line. Gosling didn’t say much more in his post. Instead he wrote:
“The hardest part is no longer being with all the great people I’ve had the privilege to work with over the years. I don’t know what I’m going to do next, other than take some time off before I start job hunting.”
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.
“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.
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 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.
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 
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