Transcript of an Interview with Larry Ellison by Reuters on the Acquisition
of Sun Microsystems: Part I
May 7, 2009
Why does Oracle, a company that prides itself on highmargins,
want to get into the low-margin hardware
business? Are you going to exit the hardware business?
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.
OK, Apple and Cisco have proven that they can do it, but
what experience does Oracle have designing hardware
and software to work together?
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 preconfigured 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.
Alright, Oracle’s done integrated hardware and software
design with the Exadata database machine. But Exadata
uses standard Intel chips. Are you going to discontinue
the SPARC chip?
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.
So is that your plan, to use SPARC to compete by
lowering a data center’s electricity bills?
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.
Your management team has no experience with
delivering hardware. There is a lot of risk in going into
an unfamiliar business.
Obviously, we want to hold on to Sun’s experienced team of
first-rate hardware engineers. For years, Sun has led the industry
in building and delivering innovative systems. For example,
Sun was the first company to deliver systems built on a multicore
processor—what Sun called the Niagara chip—and the
industry followed. Oracle has a good track record of retaining
the engineering talent from acquired companies; Sun will be no
different. In addition, over the last couple of years Oracle gained
a lot of experience developing and delivering our first integrated
hardware and software system, the Exadata database machine.
We have lots of hardware experience inside of Oracle. Hundreds
2
of Oracle’s engineers came from systems companies like IBM
and HP. Even I started my Silicon Valley career working for
a hardware company that worked with Fujitsu to design and
build the first IBM compatible mainframe.
OK, so you have engineers who are experienced at
designing hardware as well as software, but Oracle
outsourced the manufacturing of the Exadata machine
to HP. You have no experience in manufacturing.
Just because we’re buying Sun does not mean Oracle is becoming
a manufacturer. Sun outsources almost all of its manufacturing to
companies like Flextronics and Fujitsu. With one tiny exception,
Sun does no manufacturing; neither will we.
There has been a lot of speculation in the press that
Oracle is going to sell some or all of Sun’s hardware
businesses. From your previous answers it certainly
seems like you are keeping the SPARC Solaris systems
business. Are you keeping the disk storage and tape
backup businesses?
Yes, definitely. We believe the best user experience is when
all the pieces in the system are engineered to work together.
Disk storage and tape backup are critical components in highperformance,
high-reliability, high-security database systems.
So, we plan to design and deliver those pieces too. Clearly many
Sun customers choose disk and tape systems from other vendors.
That’s what open systems are all about: providing customers
with a choice. But Oracle expects to continue competing in
both the disk and tape storage businesses after we buy Sun.
Is Exadata moving to Sun SPARC Solaris?
Exadata is built by HP using Intel microprocessors. We have
no plans for a SPARC Solaris version of Exadata. We have an
excellent relationship with HP that we expect to continue. The
Exadata database machine delivers record setting database
performance at a lower cost than conventional hardware.
Customers love the machine. It is the most successful product
introduction in Oracle’s 30 year history. The Sun acquisition
doesn’t reduce our commitment to Exadata at all.
Cautionary Statement Regarding Forward-Looking Statements
This document contains certain forward-looking statements about Oracle and Sun,
including statements that involve risks and uncertainties concerning Oracle’s
proposed acquisition of Sun; plans for Sun’s hardware businesses (including the
SPARC chip) upon completion of the proposed acquisition; estimates of future
results of operations; anticipated customer, partner and product plans, advantages
and benefits; retention of Sun’s engineers; and general business outlook. When
used in this document, the
words “anticipates”, “plans”, “estimates”, “may”,
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this document due to a number of risks and uncertainties. Potential risks and
uncertainties include, among others, the possibility that the transaction will
not close or that the closing may be delayed, the anticipated synergies of the
combined companies may not be achieved after closing, the combined operations
may not be successfully integrated in a timely manner, if at all, general economic
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You are cautioned to not place undue reliance on forward-looking statements,
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Additional Information about the Merger and Where to Find It
In connection with the proposed merger, Sun will file a proxy statement with the
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with the proposed acquisition of Sun by Oracle pursuant to the terms of an
Agreement and Plan of Merger by and among Oracle, Soda Acquisition
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to the merger.
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This document is intended for information purposes only and may not be incorporated
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Oracle’s products remains at the sole discretion of Oracle.
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. 09025090
