HP To Seek Up To $4B Damages From Oracle: Report7:49 PM EST Wed. Jun. 06, 2012
Hewlett-Packard may seek up to $4 billion in damages from Oracle if it ends up proving that Oracle reneged on an agreement to continue developing software for HP's Itanium-based Integrity server line.
Word of the potential damages came after the second day of the jury trial between Palo Alto, Calif.-based HP and Redwood Shores, Calif.-based Oracle. During the first phase of the trial, HP as trying to convince the jury that Oracle made an agreement to continue developing software for the HP servers despite Oracle getting its own hardware platform with its acquisition of Sun Microsystems.
Bloomberg on Tuesday reported that unnamed sources close to HP said HP is seeking a court order to force Oracle to continue developing software to run on Itanium processors at the heart of HP's HP-UX Unix server line and pay $500 million in damages if Oracle is shown to have improperly broken an agreement between the two.
Absent a requirement for Oracle to continue developing software for the Itanium processor, HP would seek over $4 billion in damages based on extrapolated losses through the year 2020 caused by Oracle's alleged breaking of the agreement, Bloomberg wrote.
The ongoing dispute between the former partners resulted in a series of lawsuits stemming from Oracle's decision to suspend all software development on the Intel Itanium microprocessor, citing what it called indications from Intel management that it is focusing on the x86 processor line and that Itanium was nearing the end of its life.
HP's Itanium-based Integrity servers, which the company uses as the hardware platform for its HP-UX Unix operating system, was one of the primary platforms for which Oracle developed its market-leading database and other middleware.
However, that relationship started to unravel when Oracle acquired Sun Microsystems, a move that gave Oracle its own server platform. Oracle has since moved to integrate its software and server hardware into tightly-integrated appliances.
HP last June filed suit against Oracle alleging breach of contract, libel, intentional interference to disrupt business relationships and violations of business codes in relation to Oracle's decision. The two have since filed a series of suits and countersuits against each other related to that dispute.
However the dispute between HP and Oracle ends, it is already too late for HP's Itanium-based server business, said one HP solution provider who preferred to remain unnamed.
"The big winner is IBM. Period," the solution provider said.
NEXT: Tides Of Change In The Unix Server Market
That solution provider's assessment of the Unix server market appears to be correct.
Stamford, Conn.-based analyst firm Gartner, in its quarterly server sales report, estimated last month that total shipments of RISC and Itanium Unix servers in the first quarter of 2012 fell 5.7 percent compared to the same quarter of 2011.
The quarter saw a massive shift in market share between the top vendors, with IBM's Unix server shipments rising 9.0 percent while Oracle's fell1.2 percent and HP's fell 36.0 percent. That resulted in a year-to-year drop in Unix server revenue of 25.7 percent for Oracle and 40.2 percent for HP, while IBM's revenue rose 4.3 percent, Gartner estimated.
The drop in the Unix server market and the shift in market share shows that the dispute between HP and Oracle has become so public that customers are not at a comfort level to make investments in the platform, said John Convery, executive vice president of vendor relations and marketing at Denali Advanced Integration, a Redmond, Wash.-based solution provider and long-time HP partner.
The dispute between HP and Oracle is really becoming a battle of the lawyers and a battle of the press, Convery said.
"This case will get settled out-of-court," he said. "Common sense says you settle these things. My non-technical, common-sense opinion is customers will say enough of this B.S."
The lawsuit certainly hasn't stopped Oracle from trying to recruit HP solution providers to sell Oracle servers, Convery said. Oracle is in a big recruitment push led by Tom LaRocca , a 12-year HP veteran who led HP's PartnerONE program and who in January took a position as Oracle's vice president of worldwide product strategy and alliances, as well as Mark Hurd, a former HP president and CEO who now serves as an Oracle co-president.
"As I talk to my HP partner friends, I see Tom out there pushing hard," he said. "As a partner, we just keep selling to the customer and serving the customer. It's all about the customer experience. We provide the solution. The brand is secondary."
HP and Oracle spokespeople declined to comment on the Bloomberg report.