Will Dell and Oracle Be Strong Buddies?
Oracle previously had a tight relationship with Hewlett-Packward (NYSE:HPQ) — the world’s biggest PC maker — but that relationship went south when Oracle announced its ambition to acquire a different hardware company. Because HP is a hardware company, Oracle’s acquisition would put the companies at odds and into competition.
In 2010, Oracle went ahead with the acquisition of Sun Microsystems. It paid $7.5 billion to get the hardware maker. On top of that, it quickly soured the partnership with HP. And on top of that, after Mark Hurd was removed from his role as chief executive officer of HP, Oracle hired him. And to top it all off, Oracle also decided to neglect HP’s machine by not supplying some of its servers with database software.
Naturally, HP had to find a new friend. Oracle, on the other hand, had Sun Microsystems to take advantage of for its hardware needs. Unfortunately, Oracle has had some trouble getting Sun to prove a worthy investment. Hardware sales fell 23 percent year-on-year in the company’s third quarter.
That’s where Dell comes in. The computer maker has also been struggling in recent years, especially as the PC market slides in the face of competition from the smartphone and tablet market, and has been in the middle of attempting to go private through a leveraged buyout.
Dell can help Oracle on the hardware end, and Oracle can support Dell’s enterprise business with software. Together the companies will be preferred partners and launch enterprise products with Dell’s hardware and Oracle’s software in the second half of this year. Customer support will also be redirected to flow through Dell, simplifying the process for customers.
The deal sounds good for Dell, and Oracle President Mark Hurd said that it should “simplify IT and reduce integration costs by delivering hardware and software together,” which should be good for increasing business. However, it may leave Oracle investors feeling like the company has given up on Sun, and thus blown $7.5 billion.
Dell shares were down just one penny before noon. Oracle’s was up over 0.26 percent at the same time.
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