Analysis: Oracle’s Sun Acquisition May Have Little Retail Impact Initially

Written by Evan Schuman and Fred J. Aun
April 23rd, 2009

Given that Oracle is arguably the world’s largest retail technology vendor, any major change at Oracle is likely to have a retail impact. But Oracle’s $5.6 billion purchase of Sun Microsystems this week is likely to have virtually no nearterm impact on retailers.

Longterm, though, the picture looks a lot less clear and it has the potential for truly shaking up retail IT operations.

Most of the products that are likely to be at play in the merger talks—including Java, MySQL, Sun servers and workstations and Oracle’s Retail suite—will either be unchanged (Oracle Retail seems to have no redundancy and is likely to be not impacted at all) or the changes will be irrelevant (MySQL operates so far below the database size and needs of most major chains that it is likely to be irrelevant). Although Java has attracted a lot of attention and debate, it’s unlikely that Oracle would handle it much differently than did Sun.

But if one looks a bit further down the road, things could get a lot more interesting for the typical retail chain CIO.

Will Oracle Be Injured Longterm?

Over the last several years, Oracle has been on a strategic buying spree (PeopleSoft, Primavera, BEA, Retek, ProfitLogic, 360Commerce, Siebel Systems, etc.). Traditionally, such high-tech acquisitions rarely prove effective over a long period. The size and strong culture of Sun makes it a particularly good candidate for an indigestion-generating meal.

If these acquisitions eat into Oracle profits and revenues, it would likely hit R&D and customer service, a lethal combo when Oracle Retail will be trying to fend off incursions from long-time rivals such as SAP, IBM, Epicor, Microsoft and Escalate. Revenues typically take a hit during these acquisition transitions, as prospects and current customers hold off new purchases until they can see a detailed product roadmap. Those customers often will also be more open to meetings with rivals and the poaching season begins.

Profits will take a hit as contractual costs from the acquisitions hit. One of the reasons that have been cited for the failure of IBM’s offer to buy Sun, while Oracle’s offer survived, is that IBM balked at the golden parachutes Sun wanted but Oracle reportedly agreed to them.

Continuing on the pessimistic view: Such mammoth integrations distract key management at a crucial time, allowing for missed opportunities and slower than usual responses to rival attacks. All in all, if many of these problems emerge, it could weaken Oracle, which would clearly impact Oracle Retail.


3 Comments | Read Analysis: Oracle’s Sun Acquisition May Have Little Retail Impact Initially

  1. Gene Cornell Says:

    Excellent analysis. Goes along with my own view. Oracle already has customer satisfaction issues, so taking on more lines along with the turmoil of merging, resigning and laying off isn’t going to help.

  2. Rob Martell Says:

    I am not involved in retail myself. But I have worked with Oracle products in the past.
    So Open Office, Java updates, MySQL?
    Just waiting for my openOracle magazine!

    Great article, thanks!


  3. TRedd Says:

    Great write up and on the money. All of this noise really says that Oracle makes a great database and they should just focus on that. REALLY!


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