Ellison Talks Up Plan To Move to Direct Sales Model for Largest Sun Customers

Oracle CEO Larry Ellison today confirmed the company is going to sell and service the top 4,000 customers of Sun Microsystems directly but that the remaining 31,000 smaller customers will continue to be served by its channel partners.

Ellison spoke this afternoon at a briefing held at Oracle's Silicon Valley headquarters, capping a five-hour roadmap briefing by top executives. The briefing mapped out plans to integrate the two companies, which came one day following the closing of Oracle's $7.4 billion deal to acquire Sun.

As I reported earlier today, Ellison told The New York Times that Sun's partner model was "disastrous." Ellison re-iterated that he believes Oracle is better suited at selling and servicing the combined company's largest enterprise customers.

"Where Sun was sold primarily through partners and serviced their customers primarily through partners, we're going to take the top 4,000 Sun customers and go direct -- sell to them directly, service them directly, work with them directly and make sure those customers get a good return on that investment," Ellison said.

Oracle is still committed to Sun's channel partners that service its smaller customers, he said. "Sun has a number of channel partners, Oracle has a number of channel partners, they will do a great job of servicing the other 31,000 Sun customers," he said. "We are going to rely on those channel partners, we're going to work with those channel partners, we are going to do everything we can to make them successful. They will have the same broad range of products that they got from Sun and now Oracle combined."

Plans call for combining the two companies' channel programs. But Ellison acknowledged there are instances where some large enterprises will need to or insist upon being serviced by partners. But he warned he doesn't want traditional resellers in the mix.

"As long as you're a value-added partner to the large customers, you'll keep selling to those partners," Ellison said. "If you simply take the Sun box, do nothing to it, and just resell it, and that's all you're really doing, then at that point we think we are better off going direct to the customers."

Is Ellison sticking it to channel partners who were loyal to Sun for so many years? Will those displaced partners move toward pushing gear from Hewlett-Packard, which earlier this month inked a $250 million agreement with Microsoft to jointly develop their own next-generation datacenter technology? Or will you look elsewhere such as Dell? Or perhaps you see enough opportunity with the combined conglomerate to stay the course?

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Posted by Jeffrey Schwartz on January 28, 2010