In a bid to compete better against IBM and HP, Sun said on Tuesday
it will bundle Oracle's database with higher-end Unix servers and partially subsidise the fees customers would otherwise have to pay to use the software.Oracle's Enterprise Edition database software will be an option when customers buy the four-processor Sun Fire V490 or higher-end servers using the UltraSparc IV or IV+ processors. Sun will pay the Oracle licence fee, but customers will be responsible for paying Oracle's annual support and maintenance fees, said Larry Singer, Sun's strategic insight officer.
Because Oracle licence fees correspond to the number of processors a server has, Sun's subsidy can be significant on machines such as the E25K, which has as many as 72 dual-core processors. Singer said the Oracle licence fee for such as system is $850,000.
"The bigger the machine, the cooler this gets," Sun's chief executive, Scott McNealy, said at a Sun-Oracle employee town hall meeting at Oracle headquarters where the deal was announced. "We're going to effectively give you the Oracle database for free with a year of support with our new pricing model."
Oracle chief executive Larry Ellison said the partnership shouldn't cause rivalries between the two companies' sales forces. "The Oracle salesperson gets credit for the Sun sale," Ellison said. "I think the Oracle salesperson will appreciate the help of the Sun sales force in making quota."
More than half of Sun's revenue comes from selling low-end servers, but the company hopes the Oracle deal will help boost its high-end models too, where IBM has been making major market share gains against Sun.
"In the last couple [of] years, we've lost some of our momentum at the high end. This is about getting some of that momentum back," Singer said. Through the deal, running Oracle's database on Sun servers will be about 25 percent cheaper than on IBM's Power-based Unix servers or HP's PA-RISC-based Unix servers, Singer added.
The database bundling deal should be available on Sun's Web site in coming days, Singer said. The partnership, which also involves joint marketing and advertising, doesn't currently extend to Sun's UltraSparc T1 Niagara systems or its Galaxy line of x86 servers.
Also on Tuesday, the companies announced that Oracle will extend its licence to use Sun's Java software technology for another 10 years. Oracle is rebuilding its applications using the software, Ellison said.
"You guys are signing up for another 10 years of collaboration and cooperation," McNealy said, praising Oracle for its help developing Java. Oracle is "probably our number one contributor here in the Java space," McNealy said.
The move comes a few months after another long-term Java licencee, IBM, also extended its Java licence 10 years.
Best buddies
Having McNealy and Ellison share the stage was emblematic of the two
companies' work in recent months to patch up their relationship.
In 2003, Oracle said Linux would become its primary software development platform, a move that demoted Sun's Solaris. But in November 2005, the Oracle updated its position, saying Solaris is the "preferred development and deployment platform" for 64-bit x86 processors.
Meanwhile, McNealy has complained about how Oracle based its software fees on the number of cores a processor has. Sun, which has the most aggressive multi-core processor strategy in the server market, would have been at a major pricing disadvantage by such a move. But Oracle in December announced more liberal pricing for Sun's chips.
The partnership is far from exclusive, however. Sun still includes other database software, including the open source Derby, MySQL and PostgreSQL packages. "There's lots of choice," McNealy said.
And Oracle still has many other server partners. "We have a very close relationship with Dell," Ellison said.
The two chief executives joked genially on the stage. McNealy opened the event by asking whether Oracle planned to acquire Sun.
"You'll see it in the newspapers," Ellison responded. "Oracle's strong preference is to do everything hostilely."
And in showing a slide with Sun-Oracle partnership milestones, McNealy observed, "The one they didn't put in is when you and I were both pushing the network computer," the ill-fated thin client that both companies hoped would displace the personal computer.
"Let Google make the network computer now," Ellison said, a reference to the Google PC rumour that circulated last week before the Consumer Electronics Show. "They're young and foolish."
