Business software vendor Oracle Corp inched a bit closer to rivals IBM Corp and Hewlett Packard Corp in terms of providing integrated software and hardware solutions after it agreed to buy Sun Microsystems in a $7.4-billion deal.
The Oracle offer caught the industry by surprise as it came barely two weeks after the collapse of takeover talks between IBM and Sun Microsystems.
“It is interesting and makes more sense as the deal is complementary to both Oracle and Sun,” said Prashanto K.Roy, Chief Editor of Dataquest. “Overall it’s a good pointer to aspire and Oracle gets stronger. The deal will create a third player in the solutions space after IBM and HP,” he said.
Analysts expect the deal to consolidate Oracle’s positioning in key verticals such as BFSI, telecom and manufacturing, where Sun has a strong presence both in India and worldwide. Besides, the deal could also prompt rival and pure play application software vendor SAP to seek deeper alignment with partners such as IBM and HP.
Mr Kapil Dev Singh, IDC India Country Manager, said that the buyout was “a positive” for Oracle, as its infrastructure stack was now complete. “Oracle has been focused on software, middleware and database infrastructure. With this, its story in the infrastructure space is complete. However, the bigger piece or the services play is still not addressed,” Mr Singh felt.
An Oracle India spokesperson declined to comment on impact on local operations. “We cannot make any comments about implications on India business as it is too early,” the spokesperson said.
“Customers, besides having access to enterprise software and mission critical systems, would benefit from reduced systems integration costs,” said Mr Sudip Saha, analyst at Springboard Research. The buy-out will help Oracle bridge the gap in its portfolio and compete effectively against SAP, IBM and HP.
Oracle has been operating in India for over 20 years, first through distributorship and thereafter through a wholly owned subsidiary since in 1993.
According to Dataquest estimates, Oracle’s India revenues for 2007-08 were at Rs 5,800 crore, while Sun Microsystems’ earnings stood at Rs 1,674 crore.
India is Oracle’s fourth largest market in Asia in terms of revenue, up from tenth a few years ago. India also accounts for Oracle’s largest research and development investment outside the US. India also hosts several of Oracle’s global divisions and services including global consulting, global support, Oracle On–demand, Internet sales and financial accounting and analysis.
Oracle has been an acquisitive company. In India, it acquired i-flex Solutions in 2005, and later re-branded it Oracle Financial Services. Oracle currently has over 25,000 employees in the country.
Source: The Hindu Businessline