The New Economics Behind the Oracle-Dell Partnership
ByQUENTIN HARDY
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Kimihiro Hoshino/Agence France-Presse — Getty Images
This week, Dell and Oracle announced a partnership unique to both companies. Dell would
offer Oracle software on its machines and would resell Oracle services. Much
head-scratching ensued among industry analysts, largely over misunderstandings about
where the industry was headed.
What bothered many of these analysts was the idea that both Dell and Oracle sell
commodity servers based on Intel’s x86 reference designs. Oracle picked up that business
when it acquired Sun Microsystems for $7.4 billion in 2010. Sun was never a big player in
that business, however, having come to it late and grudgingly. It always preferred its own
machines, which used the Sparc chip.
From the Sun deal, Oracle got many loyal (or locked-in) Sparc customers and insights to
make the combined hardware and software “engineered systems” that advanced its
in-memory data and analytics products. If it ever wanted to compete with Dell or
Hewlett-Packard on commodity servers, it doesn’t want to now. In its third fiscal
quarter, Oracle had hardware revenue of $671 million, down 23 percent. Much of that was
faltering x86 sales.
What Oracle still wants, and Dell can offer, is exposure to smaller and midsize companies,
which Oracle’s high-ticket sales force has trouble reaching.
“Oracle has a phenomenal engine into the top 500 enterprise accounts worldwide,” said
Marius Haas, the head of Dell’s enterprise business. “They’d like to go after the broader