Less Sunshine for Oracle

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Oracle's (Nasdaq: ORCL  ) $7.4 billion acquisition of Sun Microsystems (Nasdaq: JAVA  ) won't include an advanced chipset code-named "Rock." At one time, Sun executives thought the new chip would be far superior to server processors from IBM (NYSE: IBM  ) and Intel (Nasdaq: INTC  ) , The New York Times reports.

Rock was supposed to be a next-generation chip featuring many "cores" -- i.e., separate processing units strung together on a single chip, or "die" -- and thereby capable of crunching reams of data very efficiently. Think of it as similar to Cell, the multi-core chip from IBM, Sony, and Toshiba that captured headlines in 2005.

Adding horsepower via Rock's high-powered cores would have given Sun's servers a technical edge over servers built by IBM, Dell (Nasdaq: DELL  ) , and Hewlett-Packard (NYSE: HPQ  ) , among others. But now the project has been canceled, the Times reports, and Sun will have to tune its existing SPARC chips or find faster alternatives from Intel, Advanced Micro Devices (NYSE: AMD  ) , or current big server partner Fujitsu.

That's understandable. Sun reported higher losses and a 20% drop in revenue in its latest quarter -- not exactly the sort of numbers that justify high-cost, low-yield projects.

And let's be honest: Oracle doesn't need to take on new hardware projects. Under Oracle, Sun's servers will become delivery vehicles for new database software, business applications, and middleware. An option for the discerning IT buyer who'd rather deal with one vendor, you might say.

Rock would have mattered more had IBM been Sun's white knight, as previously expected. Big Blue has a history of investing in innovation; Oracle has a history of squeezing efficiency from every business that it acquires. I expect everything that isn't necessary -- isn't proven -- will either be sold or canceled. Count Rock among the casualties.

It just didn't belong in Oracle's garden.

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Fool contributor Tim Beyers owned shares of IBM at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy would love a tasty pastry about now.

Read/Post Comments (3) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 16, 2009, at 2:52 PM, BoyleDC wrote:

    Tech sector has not had enough positive change to warrant last weeks’ highs. I am pretty certain we will settle at May 18-22 levels before the ‘regular’ trading returns.

  • Report this Comment On June 16, 2009, at 3:49 PM, BalajeSankar wrote:

    On the Contrary if IBM been Sun's Knight, it would have killed Solaris, Open Storage systems, SPARC processor/Servers (against POWERPC), NetBeans, and what not. CISCO would have been the best choice but Oracle is better choice for SUN than IBM.

    -Balaje Sankar

  • Report this Comment On June 16, 2009, at 4:27 PM, SunBurnedPony wrote:

    This was obvious last year when Dr. Yen left the company. The PONYTAIL is responsible for the Sun disaster. When it is all over, 25,000 people will have lost their jobs, customers will be less served and PONYTAIL and his yes men will be counting their money.

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