As part of the slew of Oracle announcements last week around the acquisition of Sun, Oracle said that they would in essence cut out VARs for hardware sales, where it makes sense, and go direct—gaining back a good 10 percent profit margin that Sun was paying/losing to VARs. As CNET’s Stephen Shankland wrote,
|“Oracle is now a hardware company and needs to offset the fact that it owns a number of commodity products, including not just Sun servers but also MySQL and other pieces of software.”|
This effectively will eliminate the middleman and increase Oracle’s margins, if the market is willing to pay a premium for the Oracle-Sun product line.
Oracle has been very successful at maintaining high profit margins and can probably weather the storm to some degree. The question that remains is if Oracle will be able to manipulate pricing for Sun hardware in lieu of Sun’s weak and feeble presence in the ever popular use of Linux and commodity x86 servers; a platform Oracle has embraced. It will be interesting to see how Oracle spins and tries to prevent migrations from Unix systems such as Sun Solaris to Linux.