Sun VARs Shafted As Oracle Takes Over

Software developer Oracle Corp. (ORCL) closed its acquisition of Java creator Sun Microsystems this week and the implications for partners are mixed.

Indeed, for Sun VARs that owned 4,000 of the company’s biggest customers, the news is not good. Oracle said on Wednesday it will sell to and service those clients directly. And, to do that, it’s hiring 2,000 direct sales reps. In other words, Oracle is edging out the very people who kept those customers on board despite Sun’s turbulent times over the past few years.

SearchITChannel said Oracle trotted out its channel exec, Judson Atlhoff, during Wednesday’s media and customer conference call, to reassure partners, but the strategy didn’t seem to work.

“Yeah, they put Judson up there but he didn’t have too much to say, did he? Existing Sun partners and value chain including distribution is screwed,” a Midwest-based Oracle partner told SearchITChannel.

But the anonymous IT journalist who writes The VAR Guy blog, said he (or she) thinks Oracle, like Cisco, IBM and HP, “will maintain a delicate balancing act between direct and indirect sales.”

That remains to be seen. Meanwhile, Oracle is scaling back the Sun product line and won’t allow Oracle products to be resold under the terms of Sun partner agreements. Sun partners who are members of the Oracle PartnerNetwork, however, and who hold a valid Full Use Program Distribution Agreement with Oracle, can resell the software maker’s products.

What Oracle does want for sure is for partners to target smaller and vertical markets. Problem is, Sun hardware partners are looking at losing recurring revenue.

“The trust is waning,” a Sun partner – who also used to be an Oracle partner – told SearchITChannel. The Sun channel “was placated during the protracted closing process to prevent the flight of Sun customers to IBM and HP,” the source said. “The arrogance here is concerning.”

In the meantime, here’s how Oracle is streamlining its portfolio with Sun’s: Oracle President Charles Phillips said the company no longer will hire “a lot of integrators” to create a multivendor platform.

“It was very unpredictable, there was a lack of security and it was hard to maintain,” Phillips said.

Instead, Oracle will sell what Phillips called a “completely engineered system,” running the gamut from middleware, applications, server and storage, and management.

Oracle paid $7.4 billion for Sun in an all-cash deal announced in April 2009. IBM was the first to pursue the ailing Sun – whose global server factory revenue sunk 2 percent in one year, according to IDC – but Oracle swooped in last year to claim Sun. The thinking is that Sun’s Solaris and Java systems will fill a critical gap in Oracle’s middleware business, creating a complete product set for Oracle’s corporate customers.

“Java is the single most important software we’ve ever acquired,” Oracle CEO Larry Ellison said in a 2009 conference call.


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