School of Management Professor N. Venkat Venkatraman, chairman of the Information Systems Department, says Oracle acquiring Sun Microsystems after Sun’s talks with IBM broke down could be an industry-leading move.

“Oracle has been quietly developing and refining its capabilities for integrating acquisitions – especially PeopleSoft, Siebel, and BEA Systems.  These gave Oracle an edge in terms of extracting value while ruthlessly reducing costs.  It appears Oracle is relying on that history to make Sun mesh well.

“This will be a big test with about 30,000 additional employees (nearly 40% of Oracle’s current employment).  If Oracle can pull this off and streamline the combined product portfolio, it will emerge as a serious contender as the industry transitions to cloud computing.” 

“I am wondering if HP or Dell may get into the fray now that IBM seems to be walking away.  Both could benefit from having Sun as part of its portfolio.  Or will it be a case, like Yahoo, with the board appointing a new team to develop an alternate course of action?

“It is clear that Sun is too small to be a dominant force in the transformations under way.  I thought that the IBM-Sun combination was a good one for both players and IBM’s premium was attractive to Sun.  But clearly, there are hidden details and contractual conditions that have forced IBM to take a step back.

“The breakdown is more of a problem for Sun than for IBM now.”

Contact N. “Venkat” Venkatraman, 617-353-7117, venkat@bu.edu

School of Management Professor N. “Venkat” Venkatraman, chairman of the Information Systems Department, says a would-be acquisition of Sun Microsystems by IBM could well serve IBM’s push to lead the effort to create for a “smarter” business infrastructure.

“IBM’s supposed move to acquire Sun Microsystems is seen in some quarters as a radical shift in IBM’s strategy away from its recent focus on software and services back to hardware.  I see it less about going back to hardware but more in tune with IBM’s recent push to be a force shaping the new ‘smarter’ business infrastructure in tune with the Obama administration’s vision.

“It is also very consistent with IBM’s vision of ‘cloud computing’ with more and more services delivered from the cloud.  Just as IBM’s acquisition of Lotus gave them a springboard into middleware in the 1990s, this acquisition will give them a dominant position in their fight against HP and Cisco in the short-term and Google, Salesforce.com and others in the longer-term as the IT architecture shifts to the cloud.”

Contact N. “Venkat” Venkatraman, 617-353-7117, venkat@bu.edu