Oracle's decision to stop development of its software for the Itanium platform is viewed by many in the industry as a chance to drive part of the shrinking Unix business to its Sun platform while getting a chance to turn up the heat on the Hewlett-Packard-Oracle rivalry.
Oracle also runs the risk of not only further eroding its own falling server business but also opening up parts of its market to other rivals, including Microsoft, Red Hat, and even IBM.
Oracle on Tuesday said it plans discontinue 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, which uses nearly all of Intel's Itanium processors, bases its Integrity Unix servers, its NonStop servers, and its OpenVMS servers on Itanium. Oracle applications are the most common software run on HP's HP-UX Unix platform, and so a move by Oracle to stop development for the Itanium would be a serious blow for this part of HP's business.
Both HP and Intel have come to the Itanium's defense in statements.
Dave Donatelli, executive vice president and general manager for HP's enterprise servers, storage, and networking business, called the Oracle move part of a "pattern of anti-customer behavior" to shore up its "failing Sun server business" and a "shameless gambit to limit fair competition."
Intel in its statement quoted Intel President and CEO Paul Otellini as saying Intel is committed to a multi-generational roadmap for HP-UX and other operating systems that run on the Itanium.
The move comes after an intense rivalry heated up between Oracle and HP following Oracle's acquisition last year of Sun Microsystems, which gave Oracle a fully-developed server business that competes with HP and IBM.
Since then, Oracle has moved to break the 20-year-plus relationship with HP under which HP was Oracle's primary go-to partner for its software.
HP customers are confused about the Oracle message, said Peter Katz, CTO of PKA Technologies, a Suffern, N.Y.-based solution provider and long-time HP partner.
"I've gotten a number of frantic calls from existing HP-UX customers wanting to know what it means for the future of HP-UX and Itanium," Katz said. "Other customers I reached out to don't care what Oracle does, and say that they will stay with HP-UX if they need Unix."
HP has a long-term commitment to Itanium, Katz said. Not only does HP still have a strong HP-UX business, it also has a long-term commitment to government customers with its OpenVMS line. "Between HP and Intel, they're not going to let Itanium go away," he said.
The cutting of Oracle software development on the Itanium could mean the death knell for HP's Integrity server platform, said Dhruv Gulati, executive vice president at Lilien Systems, a Larkspur, Calif.-based solution provider and HP partner.
"Most of the applications running on Integrity are Oracle," Gulati said. "To me, reading between the lines, this is Oracle saying, 'this is how we take out Itanium because we have the Sun line.'"
The dispute between Oracle and HP over the future of Unix goes back for years when Sun and HP battled over the future of the operating system.
Scott McNealy, who was CEO of Sun before it was acquired by Oracle, in 2006 proposed that HP merge its HP-UX with Sun's Solaris operating systems to form a single offering.
Next: HP's Itanium Business Slipping, Oracle's Server Business Crashing
Tuesday's Oracle move comes at a time when the overall market for Unix servers based on the Itanium processor or on RISC processors such as Oracle's SPARC is declining.
Gartner in February estimated that a total of 198,855 RISC and Itanium Unix servers were shipped worldwide in 2010, down 16.8 percent from the 238,928 servers shipped in 2009. Revenue for those servers reached $10 billion, down 11.6 percent from the $11.3 billion spent in 2009.
Oracle's Sun server line has taken the biggest beating as the market drops. It was the largest shipper of servers to the RISC and Itanium Unix market, accounting for a 41.3 percent share of the market, Gartner said. However, its shipments fell by more than 29 percent from 2009, the largest drop of any vendor.
In terms of revenue, Oracle was number three with a market share of 24.6 percent. But Oracle's revenue for this part of the market fell 19.4 percent, a number that was exceeded only by Groupe Bull, a French company with a 1.5-percent market share, Gartner said.
It was even worse for Oracle in the fourth quarter of 2010, several months after Oracle articulated its Sun server strategy. The total number of servers shipped in the fourth quarter fell 10.7 compared to the fourth quarter of 2009, but Oracle's shipments fell 31.2 percent during that time. However, Oracle's fourth-quarter revenue dropped only 15.5 percent over the year before.
HP has fared a little better. It was the third-largest shipper of servers to the RISC and Itanium Unix market with an 18 percent market share for all of 2010, with shipments down 6.6 percent over 2009. HP was the second largest in terms of 2010 revenue with a 27.8 percent share, with revenue falling 12.7 percent over 2009.
However, for the fourth quarter of 2010, HP's RISC-Itanium server shipments actually rose 3.1 percent over 2009, while its revenue fell only 5.4 percent during that time.
Given the decline in Oracle server business, it is hard for solution providers to see how Oracle can be a clear winner in this new dispute with HP.
Gulati said that customers who are close to HP are more likely to move to HP's x86-based blade server platform. "If they are not loyal to HP, they may look to IBM or Oracle or Dell," he said. "The dispute could be a boost to Oracle-Sun. Oracle still has 30 percent of the market. But it will boost IBM, too."
Katz said he sees other companies as winners in the dispute, particularly Microsoft and its Windows and SQL database market and Red Hat's Linux business. "The Microsoft people are rubbing their hands in anticipation," he said.
IBM could also be a winner, in a perverse way, given the long-time rivalry between Oracle and IBM in the database market, Katz said.
"Oracle is now in a position of supporting IBM, and helping Microsoft and Red Hat," he said. "This is weird. Microsoft, Red Hat, and IBM are coming out winners."
The dispute over Itanium is a way for Oracle to reduce the number of hardware platforms it supports while getting more support for its Sun platform, said Mark Teter, CTO of Advanced Systems Group, a Denver-based solution provider and HP partner.
"The benefit of Oracle's being in the hardware business is that they can eliminate the competition," Teter said. "But there are no real winners between the two. It's only Oracle taking advantage of being in the hardware business to eliminate HP. But it's just a blip in Oracle's revenue."
Next: Larry Ellison As Wile E. Coyote
Katz said that if he were Oracle Chairman Larry Ellison, he would probably do the same in terms of hitting at HP.
"Larry Ellison is like Wile E. Coyote," Katz said. "His move to hire (former HP CEO) Mark Hurd was brilliant. If I were Larry, I'd do the same move against Itanium. Will HP roll over? No. But it's a very smart move for Larry. I have a lot of respect for him."
HP and Oracle declined to comment further on the news.