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Oracle in HPC Why-Why Not

by Christopher Willard, Ph.D.
for Intersect360 Research (originally published under the Tabor Research name)
Apr 27, 2009

as published in HPCWire

as published in HPCWire

With Oracle's acquisition of Sun for $5.6 billion (net), the company is acquiring, among other assets, an estimated 8.4 percent stake ($627 million) in the traditional HPC server market. The question arises: is this an asset that Oracle will keep/nurture as it moves to integrate Sun into its ongoing product and operations strategy? Here are some thoughts on whys and why not's for the proposition.

Whys

Revenue is revenue -- We estimate that HPC server sales accounted for about 4.7 percent of Sun's CY2008 revenue; additional HPC revenues also accrue to Sun from storage and service sales. Oracle is looking for the "acquired business [that] will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year." Although much of this profit could be had from operations efficiencies -- Sun's FY08 SG&A expenses were roughly $4 billion and R&D $2 billion -- 5 percent of revenue is still a lot of change to make up.

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