Oracle Details Alleged HP Payments To Keep Itanium Alive

Oracle has released court documents its says show that Hewlett-Packard made a series of payments to Intel to keep the Itanium processor alive and agreed with Intel to artificially stretch out the Itanium roadmap.

The details came from a newly-unsealed lawsuit filed by Oracle last year in which it alleged that HP agreed to pay Intel nearly three-quarters of a billion dollars to continue developing Itanium processor to prevent customers of HP's Integrity server line from adopting competing platforms and disrupting HP's lucrative Integrity-related service business.

Oracle's cross complaint, which it filed on June 15, was originally sealed by the court at Oracle's request but released in unredacted form Monday after Judge James P. Kleinberg of the Superior Court of California in Santa Clara County dismissed Oracle claims of fraud against HP and said that HP and Oracle must both unseal certain documents.

An HP source who declined to be named said that, with the decision by the judge to unseal the documents and dismiss an Oracle claim that HP engaged in fraud, HP can concentrate on getting back to the trial over the original lawsuit. The source did not address the specific claims in Oracle's June 2011 lawsuit.

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However, in a statement, HP wrote, "We look forward to seeing the facts made public that demonstrate how Oracle's March 2011 announcement to no longer develop software for Itanium servers was part of a calculated business strategy to drive hardware sales from Itanium to inferior Sun servers. This further demonstrates the fact that Oracle breached its contractual commitment to HP and ignored its repeated promises of support to our shared customers."

The fraud claim, which was part of the newly-unsealed Oracle cross complaint, stemmed from Oracle's assertion that HP duped it into signing an agreement over its hiring of dismissed HP President and CEO Mark Hurd. Oracle alleged that HP concealed the fact that it planned to hire two new executives hostile to Oracle, including former SAP CEO Leo Apotheker as the new HP CEO and Ray Lane, a former Oracle executive, as the company's chairman.

Details of some of those documents had been available before in redacted versions, which are edited forms of documents with sensitive parts blanked out or covered by black stripes to show where parts were cut.

In its cross complaint, a copy of which was sent to CRN by Oracle, Oracle alleged that HP had engaged in a "multi-year campaign of secrecy and deception designed to conceal the truth about Intel Corporation’s commitment to the Itanium microprocessor in order to extend its Itanium server business at Oracle’s expense and reap large profits from its own unsuspecting installed base of Itanium users."

Oracle alleged that HP in 2008 or earlier learned from Intel that Intel wanted to end development of the Itanium processor because of the chip's market position and because Intel wanted to focus its development resources on its x86-based Xeon processor line. Oracle, citing "HP internal documents," alleged that HP knew that the Itanium development was a distraction to Intel.

The Oracle complaint, quoting from internal HP communications, alleged that HP itself believes the Itanium roadmap is "'more an illusion than of technical significance,'" and that HP wanted to extend the Itanium roadmap to '"create market perception of long term viability.'"

Oracle also alleged that HP in 2010 extended its collaboration agreement with Intel related to the Itanium processor after determining that its original plan to port its HP-UX operating system to the Intel Xeon server platform would result in problems with convincing independent software vendors to support the new HP-UX.

Oracle further alleged that HP was concerned about losing its profitable support business based on its Integrity servers.

HP-UX is HP's version of Unix, and competes directly with Oracle's Solaris Unix operating system. HP-UX currently runs only on the Itanium server platform. Intel's public roadmap calls for the next version of the Itanium processor, code named Poulson, to be released some time this year. The roadmap also includes a further processor, code named "Kittson," for which a release date has not yet been announced. However, Intel has traditionally came out with a new version of its Itanium processor every two to three years.

Oracle alleged that HP convinced Intel to update its Kittson roadmap to split the Kittson processor into two separate releases separated by two-and-a-half years, which let HP extend its "profit pool" based on revenue and services from the Integrity server platform through 2017.

"Under the agreement, the aggregate functionality of the two releases is established first, with HP retaining the right to withhold known Kittson functionalities until the ostensibly next-generation chip. HP did not reveal any of this to the marketplace," Oracle wrote in its cross complaint.

Next: Oracle Says HP Pays Heavy Price For Continued Itanium Development

The second Kittson release, Oracle alleged, would have an Itanium core but be built into a Xeon-compatible socket, a design which Oracle wrote would help HP migrate its customers to the Xeon platform over the next five years.

Those moves would cost HP nearly three-quarters of a billion dollars, Oracle wrote in the cross complaint.

In 2008, HP and Intel signed an "Itanium Collaboration Agreement" under which HP would pay Intel $440 million over five years to continue development of the Itanium through the release of the Kittson model in 2012, Oracle alleged.

Oracle further alleged that HP agreed in October of 2010 to pay Intel an additional $250 million-plus to produce the Itanium for an additional three years and to update its roadmap.

However, Oracle alleged, HP deliberately withheld information from its customers about the Itanium processor plans in order to protect its Integrity server revenue stream.

"In fact, if it became clear that the purpose of the 'extended roadmap' was simply to produce a processor that would migrate customers to x86 in five years, a customer making an IT decision today would not wait for HP’s Xeon hybrid solution to come to market—they would simply move today, as would many of HP’s current customers. In fact, Intel has sought to reveal the socket-compatible nature of Kittson publicly numerous times and HP has blocked it from doing so. The market still does not know about it," Oracle wrote in its cross complaint.

Oracle also wrote that it made its decision to stop development of the next generation of its database, named 12g, in March of 2011 based on general market signals of the Itanium processor's market decline and discussions with Intel executives about the Itanium, and that at the time it had no knowledge of the alleged "secret HP-Intel deals."

Oracle has previously stated that it will support the Itanium-based servers on current versions of its software through 2018. However, Oracle alleged in the cross complaint, "HP nonetheless chose to defame Oracle at every turn with allegations that Oracle was refusing to support existing Itanium system users."

Oracle backed up that allegation by citing several media reports, including some from CRN, in which HP executives allegedly gave false and misleading statements about Oracle in relation to the Itanium server.

Oracle and HP had a decades-long relationship in which HP's mission-critical servers were one of the top platforms for Oracle's database and middleware products.

However, that relationship started to unravel when Oracle acquired Sun Microsystems, a move which gave Oracle its own server platform. Oracle has since moved to integrate its software and server hardware into tightly-integrated appliances.

Oracle declined to further discuss the unsealed documents.

An Intel spokesperson, in an emailed response to CRN, said the company has not announced any specific product plans. Intel works on a multi-year planning horizon, and product roadmaps, whether for Itanium or for Xeon, do not go beyond that, the spokesperson said.