Like Silicon Graphics in bankruptcy again and now merging with Rackspace, Sun has been unable to recover from the dotcom bubble of 2000-2001. The biggest problem appears to be that Sun was unable to redesign and manufacture next-generation servers without falling behind other hardware companies and chip makers, nor were they able to monetize sufficiently their software platforms. Thus, the gains for Oracle are huge – the Java programming language, the MySQL database platform, and the Solaris operating system, all owned by Sun are the foundation of the internet in many instances, old and new.

Oracle now owns and manages its own legacy database platform, plus MySQL and InnoDB, another open source standard that is rising quickly in popularity. Marten Mickos, the former CEO of MySQL, was quoted in Forbes with these comments on the deal:

“It’s amazing, and not entirely surprising. Oracle has the money and is a long-term, strategic player. They went into applications to compete with SAP and have successfully done this. Now they want to out-compete Microsoft.”

“Microsoft’s database business is the fastest growing. Oracle can use MySQL to achieve a stronger developer community.”

For many people, this deal “feels better” and seems to make more sense than a Sun-IBM merger, because both companies are ideologically aligned and operate as traditional allies in Silicon Valley politics. But Oracle has no history in hardware production along the lines that Sun maintains. Business Week reports that Oracle earns margins of 46% in its software development, sales, and maintenance contracts. Even at its best, server & hardware manufacturing would be a significant drain on this.

“Java is key to a set of Oracle business applications called Fusion, designed to stitch together the array of programs Oracle has scooped up through its acquisition binge. Controlling the software in house could help Oracle assure customers of a smooth transition from older products to new ones. And owning Java gives Oracle a counterweight to Microsoft (MSFT) as it tries to convince more developers to incorporate its database, middleware, and other software into their products.”

“Oracle is expected to generate more than half of its estimated $23.1 billion in 2009 sales from technical support and ‘maintenance’ of products its customers have already licensed. Those support contracts carry profit margins of about 90%. Controlling Java ‘is all about future maintenance streams,’ says Citigroup’s Thill. ‘This will create stickier lock-in for the Oracle installed base.’ ”

Though many suggest Oracle may be better to sell off Sun’s hardware division and focus on maintaining and expanding the Java, MySQL, InnoDB development & services platform, Oracle is suggesting it will attempt to maintain the server division and is looking at producing “stacked” machines, or servers pre-loaded with custom operating systems and software for large corporate / research requirements. Currently Sun is the 4th biggest server manufacturer, behind IBM, HP, and Dell.

“Amitabh Goel, a securities analyst at First Global, said he was ‘not very positive on the acquisition, as it remains to be seen how Oracle will run a hardware company, with Sun’s market share on a declining trend.’”

“But the purchase was ‘in line with Oracle’s goal to gain share in the data centre market and offer more integrated end to-end products,’ he added.”

” ‘With the acquisition, Oracle will now be able to offer an integrated stack of hardware, software, and services to its customers.’ ”

“During a conference call with analysts on Apr. 20, Oracle CEO Larry Ellison called Java ‘the single most important software asset we have ever acquired.’”

“Scott McNealy, chairman of Santa Clara, California-based Sun, which employs more than 33,500 people worldwide, hailed the merger as ‘an industry-defining event’. “

This is a post from Web Dev News, a site brought to you by Xavisys Web Development.

Oracle buys Sun – To Provide Integrated Hardware, Software, Services around Java

For a nice archive of downloadable shapes for building wireframes, see:
http://www.jjg.net/ia/visvocab/

I had two versions of Office installed, and decided to use the text box drawing facility of Word 2007 to build the wireframes for the site. Sadly, over the last two weeks, my computer’s performance had been slowing. I defragmented the hard disk and about two days later the disk crashed – it looked like a bad sector. After running CheckDisk utility, the computer booted up again, still slow, the sector had recovered. I decided it was a good idea to replace the main hard drive, and spent the weekend rebuilding the desktop. In the process, I lost my ability to edit .docx files, and the wireframes were due on Monday. So, I began looking to convert the .docx files to Open Office files for translation and republication.

Open Office “Ninja” has a great resource on the different ways to translate a .docx file at:
http://www.oooninja.com/2008/12/better-office-docx-converter.html

For reference, the ODF-Converter-Integrator available for free download from OO-Ninja works perfectly in translating the wireframes from a .docx file to Open Office .odf – something that Sun’s Open Office (even with all its benefits) couldn’t do. Opening a 35 page .docx file of wireframe sketches in Sun’s Open Office without first converting the file using this utility does not work currently – all of the lines, text, and tables run together and the document is unreadable. The other option which looks really good is Novell’s Open Office – it has the .docx to .odf converter built in so that it actually works, but there may be some cost for the software.

Download Sun Microsystem’s Open Office: http://www.openoffice.org/

Download the .docx to .odf Converter: http://www.oooninja.com/2008/12/better-office-docx-converter.html

Download Novell’s Open Office: http://www.novell.com/products/desktop/features/ooo.html

After getting everything up and running, desktop re-built, I realized quickly that Open Office was a much better application than Word. It supports Word formats as well as .pdf, but really the gem is its simplicity – doing everything you need for word processing and office document management, plus additionally including drawing, spreadsheet, presentation, and web publishing. Free open source software contains many benefits, but the best here is finally the end of the dancing paperclip and “dog” characters that are constantly popping up and giving advice in MS Word.

Background:

http://technologizer.com/2009/01/02/microsoft-clippy-patents/

http://en.wikipedia.org/wiki/Office_Assistant

While I am in no way a Microsoft basher- I switched from Mac to PC in the late 90′s, but at the same time, I am not the only one who sees “Clippy” as a prime example of a reason to advocate free, open source software. As Michael Meeks, a programmer with Novell who works on Open Office and Word compatibility stated in an interview a couple of years ago:

Free software gives you the freedom that, even if you are a one-man shop, you can have it fixed if it is annoying you enough. The example I like to give is ‘Clippy’ — remember? — that whipping boy of journalists. You couldn’t turn it off and it came on and you had to talk to it before you came on.

Now turning Clippy off, in my estimation, is a single line of code change. With Microsoft you just couldn’t do that. You couldn’t get into their software, find the piece of code and just fix it. If you think about the software cost of some catastrophic blunder, often it would be way cheaper if you could just get in and fix it. I think that is a huge benefit of the free-software industry.

I am also not likely to be opening up Open Office and start re-arranging the code base to add and remove features for my own use, but nevertheless I am really happy about making the switch and expect to stay with Open Office as my main software for office productivity and document authoring. Even so, it is still a huge decision to change my entire desktop from Widows to Linux, much more so than migrating from Apple, and I doubt I will make that decision at any point in 2009. While I will most certainly upgrade from XP to Windows 7, skipping Vista altogether, as I think many users will, Microsoft needs to definitely improve their Office software or risk losing more and more market share to Open Office, and ultimately the whole desktop market to Linux on this same principal.

This is a post from Web Dev News, a site brought to you by Xavisys Web Development.

Making the Change – MS Office to OpenOffice.org

Yet, some are saying IBM doesn’t need Satyam with its 50,000 employees and IT staff that form the outsourcing backbone of the majority of the world’s Fortune 500 companies. IBM already has around the same number of employees in India currently, making it with Infosys, Wipro, TCS, Cognizant, and Satyam one of the top IT outsourcing service providers in the country. Analysts say Satyam’s potential liabilities, from a class action shareholder suit against Raju for destroying stock value and a lawsuit by Upaid for fraud / copyright issues could be problematic, to the tune of over $100 Million in liabilities. Bidders for the company have been unable to review the full accounts of Satyam, as the investigation into the accounting fraud is still ongoing. Clients have canceled accounts with Satyam, and the company has taken a bridge loan to cover operational costs until a new buyer is found. What advantage to IBM, then, in purchasing the company with so many problems?

Return then to the bidding process. Currently, 51% of Satyam is being sold by the government. A list of bidders who have confirmed requirements includes 8 companies, some of which have been mentioned at various times during the process as:

1. Larson & Toubro – Indian Engineering Firm
2. Tech Mahindra – IT Branch of Indian Conglomerate
3. Spice Group – Now Withdrawn from Bidding
4. Wilbur Ross – Distressed Assets, Venture Capitalist
5. IBM – or their proxy
6. HP – very little on this possibility published
7. Cognizant – Reportedly withdrawn
8. KKR – PE firm, May be in or outsourced

Again, there may be another private equity firm or multinational IT company involved but not publicly confirmed, some of the names listed above may not be included. The front-runner is considered L&T, whose founder has already acquired around 12% of the company. IBM is reportedly purchasing Sun Microsystems at what may be considered an incredible price – a former $200 Billion USD company at a fraction of its value. Even so, the purchase price was double Sun’s market value at the time of the announcement. Would a 100,000 strong outsourcing team in India, combining IBM Global and Satyam be a powerful backend for a fused IBM-Sun conglomerate? The fact is Satyam has one of the best client portfolios in the world, and the company has IT service contracts with Fortune 500 companies that could add $1 – $2 Billion USD in yearly income to the company that acquires it at current value. Companies generally sell between 10 and 20 times average yearly receipts, but since Satyam’s books are scrambled, nobody knows for sure what that value is.

Satyam needs a strong buyer with unparalleled corporate governance, openness, and transparency. They need a company that instills confidence in their client base and brings in new accounts. The Satyam staff or employee base are recognized as being some of the most talented in the world – before the Ramaling Raju revelation, there were really few companies with the international reputation of Satyam, in a very good way. Satyam essentially invented IT outsourcing or BPO, industries that have created a development revolution around the world, and trillions of dollars in business. This is the main point – more than being an Enron or Ponzi scheme, Satyam was one of the best and most innovative companies in the world over the last 25 years, and their employees are among the most talented and respected in the field. In 2006, IBM considered a takeover of the company at its heights – and at a market cap over 10 times current values.

So there is a bond and a perfect synergy between Satyam and IBM, the main issues being former management (already removed). But L&T has to be seen as the front runner and favorite in the bidding. Unless one of the PE firms makes a surprisingly high offer and outbids them, or IBM seriously pursues Satyam (something most market analysts are suggesting they are not doing), or another wildcard emerges, L&T will probably win the bidding. A bid by HP aimed at fusing their work with Mphasis and Satyam into a large outsourcing service provider based in India would be an exciting development, but nothing suggests anything like this is brewing.

Taking a Wilbur Ross model, imagine a PE firm buying Satyam – required by law to hold the company for three years, selectively acquiring other international outsourcing and BPO companies, merging the companies together, building up a massive IT service providing company, selling it off when the market recovers – similar to what he has done in steel and coal. The fact is that no one can really compete with Indian BPO at this point and it is going to grow continually based on cost / quality factors over the next 10 years, and no one really does that better than Satyam traditionally. There is massive potential here and the base is strong.

Whatever the motivations, potential benefits and unknowns, the process looks to be resolved quickly – reports suggest the sale will be announced within 2 weeks. We can hope the best for Satyam and its employees, and hopefully the company’s recovery will be symbolic of the overall greater recovery of the economic situation globally.

This is a post from Web Dev News, a site brought to you by Xavisys Web Development.

Prospective Satyam Bidders May Include IBM – L&T, Tech Mahindra Confirmed