Sun, Oracle VARs Differ Over Future Of Sun Hardware

Legacy Sun solution providers are more and more likely to be bringing non-Sun hardware to their customer base in the wake of Oracle's acquisition of Sun.

Meanwhile, legacy Oracle solution providers who have not traditionally had a hardware practice are considering adding Sun hardware to their product line cards.

Oracle in January closed its $7.4 billion acquisition of Sun.

The move by legacy Sun solution providers to increasingly embrace servers and storage from competing vendors such as Hewlett-Packard, IBM, and Hitachi Data Systems comes at a time when Oracle is trying to convince partners and customers to consider implementing integrated software-hardware solutions.

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At the same, customers are showing concern about whether to continue with the Sun platform into the future.

In a research paper dated June 29, analyst firm Gartner said that a majority of its clients would favor the Solaris operating system on x86-based servers if Oracle would support that OS on non-Sun hardware.

That support is already happening, with Oracle last week saying it signed deals with HP and Dell to sell and support Oracle's Solaris, Linux, and virtualization platforms on their x86-based servers

Gartner also reported that it expects revenue from the Sun SPARC servers to continue to fall compared to sales of similar servers from IBM and HP, and that business users feel the combined Oracle-Sun sales force has been ineffective in selling servers.

That concern is already evident in overall server sales where, despite a strong first-quarter 2010 recovery in server revenue and shipments over the same period of 2009, Oracle is the only one of the top five vendors to show a decline.

And that decline is a major one, according to Gartner. Oracle's total server shipments, which is based Sun's product line, fell 29.5 percent in the first quarter of 2010 compared to 2009, while server revenue for the company dove 38.7 percent during the same period.

Oracle's storage hardware situation is almost as dire as its server business. IDC estimated that the total storage business in revenue terms fell 8.6 percent in 2009 compared to 2008. But of the top eight vendors, Oracle's storage business fell the most, by 29.4 percent in 2009 over 2008.

Next: Legacy Sun Partner Adopting Non-Sun Hardware

These concerns are translating into doubts about the future of Sun's hardware platform among many long-term legacy Sun solution providers who discussed their concerns on the condition their identities remained anonymous.

One of those legacy Sun solution providers has accelerated its business with HP and IBM since Oracle acquired Sun, and said that customer spending on the Sun platform is declining.

"Our Sun business overall is declining," the solution provider said. "Oracle is saying, look at all these Oracle customers who are not yet Sun customers, all of whom will want Sun hardware. I don't see any hope for that."

Oracle direct sales reps are looking at taking some the solution provider's existing business direct even as HP and IBM are pushing the solution provider to switch Sun customers to their platforms.

"Switching customers to new platforms is not easy," the solution provider said. "Some customers have switched. But if customers go direct with Oracle, and Oracle does a better job of satisfying their service level and pre- and post-sales support needs better than we do, then we should find another business to be in."

However, customers are used to the solution provider's level of support, and Oracle does not have the experience it needs to support hardware customers over time, the solution provider said.

"At some accounts, we've been there for 20 years," the solution provider said. "There's a great trust level between us. We know the customer and its environment well. Not just on the Sun side, but in terms of NetApp, Symantec, and other vendors. I like to believe the trust we have is worth a lot to the customer. If Oracle decides to go direct, we will continue to work with our customers. If not by selling Sun, then something else."

Another legacy Sun solution provider said that his company's Sun business is only one-third of what it was two years ago, with its education Sun business nearly gone.

As a result, that solution provider has signed with HP and NetApp in the last couple of months. It also has moved part of its storage business from Oracle to Hitachi Data Systems, and has seen its HDS business has triple in the last few months.

"I've had a large telecom customer tell me it doesn't want to have Sun in any of its data centers within a year," the solution provider said.

Next: Legacy Oracle Partners Giving Sun Hardware A Second Look

Oracle expects a wide swath of its customer base to be interested in moving to its Sun hardware platform, said Judson Althoff, the company's senior vice president of worldwide alliances and channels.

Before the merger, Sun had about 35,000 accounts worldwide, compared to about 350,000 accounts for Oracle, meaning that over 300,000 Oracle customers are running Oracle software on non-Oracle hardware, Althoff said.

"We will be investing a lot of R&D to make sure Oracle software works best on Sun hardware," he said. "Sun CMT servers are the best for running Oracle software. So there are lots of opportunities to sell and deliver support on these products."

That message is starting to resonate with long-term Oracle solution providers who currently do not have a hardware practice.

Rich Niemiec, president of Rolta TUSC, a Chicago-based solution provider which has partnered with Oracle for 20 years but which exited the hardware business over 10 years ago, said his company is think about re-engaging with the Sun hardware platform.

"We're looking at doing Sun again because of the acquisition coupled with the excitement of that hardware," Niemiec said. "You hear a lot of excitement about it from customers. There's some propensity in the minds of customers to put Oracle's hardware and software together. Not all the customers think that way. But many are going with Oracle's marketing about buying it all together."

Oracle's marketing machine is generating the kind of interest in Sun hardware that Sun never could, Niemiec said.

"Oracle is quite dedicated to the hardware side," he said. "They're out there all the time with marketing. You see it all the time now. Sun just did little things here and there with marketing."

Chuck Egerter, president of Eagle Business Solutions, a Clearwater, Fla.-based Oracle solution provider, said his company has not really looked at the Sun hardware yet, but won't rule out trying it in the near future.

"Hardware is not our skill set," Egerter said. "But we're curious. If someone presented it as an opportunity for us, we'd sit in and listen."