Oracle CEO on Sun Micro future

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Oracle Corp Chief Executive Larry Ellison shook up Silicon Valley last month when he made a surprise move to enter the hardware market by acquiring computer maker Sun Microsystems Inc. Some analysts speculated that Oracle, the world's largest database software maker, actually wants Sun's software assets and that it might eventually sell off the hardware business. Below are Ellison's comments on his rationale for buying Sun and strategy for turning around the struggling company.

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Will Oracle shut Sun’s hardware business?

Mail to friend Q. Why does Oracle, a company that prides itself on high margins, want to get into the low-margin hardware business? Are you going to exit the hardware business? A. No, we are definitely not going to exit the hardware business. While most hardware businesses are low-margin, companies like Apple and Cisco enjoy very high-margins because they do a good job of designing their hardware and software to work together. If a company designs both hardware and software, it can build much better systems than if they only design the software. That's why Apple's iPhone is so much better than Microsoft phones.

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Can Oracle really make hardware and software together?

Mail to friend Q. Apple and Cisco have shown they can make hardware and software work together. What experience does Oracle have designing hardware and software to work together? A. Oracle started designing hardware and software to work together a few years ago when we began our Exadata database machine development project. Some of our competitors, Teradata and Netezza for example, were delivering pre-configured hardware/software systems, while we were just delivering software. The combination of hardware and software has significant performance advantages for data warehousing applications. We had to respond with our own hardware/software combination, the Exadata database machine. Oracle's Exadata database machine runs data warehousing applications much faster -- at least ten-times faster than Oracle software running on conventional hardware. All the hardware and software pieces, database to disk, are included. You just plug it in and go - no systems integration required.

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Will Oracle discontinue Sun SPARC?

Mail to friend Q. Oracle's done integrated hardware and software design with the Exadata database machine. But Exadata uses standard Intel chips. Are you going to discontinue Sun's SPARC chip? A. No. Once we own Sun we're going to increase the investment in SPARC. We think designing our own chips is very, very important. Even Apple is designing its own chips these days. Right now, SPARC chips do some things better than Intel chips and vice-versa. For example, SPARC is much more energy efficient than Intel while delivering the same performance on a per socket basis. This is not just a green issue, it's an economic issue. Today, database centers are paying as much for electricity to run their computers as they pay to buy their computers. SPARC machines are much less expensive to run than Intel machines.

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How will Oracle leverage SPARC?

Mail to friend Q. Is your plan to use SPARC to compete by lowering a data center's electricity bills? A. No. Our primary reason for designing our own chips is to build computers with the very best performance, reliability and security available in the market. Some system features work much better if they are implemented in silicon rather than software. Once we own Sun, we'll be able to plan and synchronize new features from silicon to software, just like IBM and the other big system suppliers. We want to work with Fujitsu to design advanced features into the SPARC microprocessor aimed at improving Oracle database performance. In my opinion, this will enable SPARC Solaris open-system mainframes and servers to challenge IBM's dominance in the data center. Sun was very successful for a very long time selling computer systems based on the SPARC chip and the Solaris operating system. Now, with the added power of integrated Oracle software, we think they can be again.