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Oracle To Take Top 4,000 Sun Customers Away from Partners

RCPmag.com's Jeff Schwartz was all over yesterday's big Oracle-Sun acquisition announcement like your editor on a free buffet. (Seriously, people stare. But it's free!) Let's rummage through a bit of what Jeff gleaned from Larry Ellison's day-long tour de ego.

Just looking through here (go ahead and imagine that we're kind of whispering and dragging out the last word of every phrase as we flip through pages)...going to focus on bundling hardware with applications and database software; that's interesting...here's something about competition from the Microsoft-HP alliance and from IBM...there's a new product called Exadata...oh, wait; here's a quote from Ellison himself. Let's see what he has to say:

"It is odd that the computer industry ships all these separate parts and expects customers to assemble them," Ellison said. "You will now be buying this complete system, and don't have to hire IBM or someone else to assemble it for you."

Huh. Well, that's kind of an odd quote. It would seem to us that partners do a lot of that assembling, probably because they're experts at it and know how to assemble, customize and maintain systems better (and more cheaply) than most internal IT people or big software vendors do. That's part of the reason why Microsoft has 600,000 partners or some such number and has been pretty successful using a channel strategy over the years. Gosh, it almost seems as if ol' Larry has something against the channel. Wait...what's this? A blog post from Jeff? Ellison's going to do what?

Yes, it's true. Oracle is going to take Sun's top 4,000 customers and move them to a direct-sales model and away from working with partners. Larry said it himself during yesterday's please-pay-attention-to-me-and-not-to-Steve Jobs event. He also talked to The New York Times about it. Check out this bit from another blog post by Jeff:

However, Oracle will sell its products direct to Sun's top 4,000 customers, Ellison tells The New York Times. Those 4,000 customers account for 70 percent of Oracle's revenues. Ellison indicated Oracle will move away from relying on Sun's partners to serve those customers.

"The partner model was disastrous, and we are immediately changing that," Ellison tells the Times.

Really? So, it was the partners that brought Sun to its knees, not poor leadership, questionable strategic decisions and a company more bloated than...well, than your editor after an hour of eating at a free buffet? That is interesting. Because Dell swore off the channel for years and then came back. And Microsoft, as we mentioned earlier, is king of the software mountain and has been for a couple of decades, thanks in very large part to its channel-heavy approach and massive partner base. Wow, those Sun partners must have really been duds.

Or maybe -- just maybe -- Larry's making a big mistake here. He doesn't make many; Oracle's ravenous approach to acquisitions has served the company pretty well so far. But hiring thousands of new direct salespeople and effectively cutting off the channel -- is that really what Sun needed all along? Or is Ellison just getting greedy and wanting to keep all the sales and service revenues for himself? We suspect a little bit of both.

In any case, yesterday was a bad day for the channel, and Oracle has clearly demonstrated what it thinks of you, partners, and how it's going to deal with the channel from now on. Will Larry Ellison turn into Michael Dell in a few years and want to partner with you again? We'll see...and here at RCPU, we hope so.

What's your take on Oracle ditching Sun's partners and going direct? Send it to lpender@rcpmag.com.

Posted by Lee Pender on January 28, 2010 at 11:56 AM


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