Early this morning the database servers at Dell Computer went down hard. The company is unable to accept orders on its web site and almost 5000 Dell sales reps trying to meet their quotas in the last week of the quarter are unable to book sales. Today’s loss for the company is already over $50 million and rising.

The database system in question is Oracle running atop NonStop Unix on a Tandem NonStop (now stopped — what an irony) system made, of course, by Hewlett Packard. So Michael Dell is pulling his hair out at this moment while he waits to be saved by HP.

It could be a long wait.

I guess NonStop means never having to say you’re sorry.

Driving Miss Sadie

Last week I announced that I’m planning my own Android phone and the next thing you know Google does the same thing!  Coincidence? I think not.  Our motivations are somewhat different, however, and their budget, at $12.5 billion, is marginally higher. I’ve had plenty of time to think about this as I drive the dogs across country to our next home in California and there’s quite a bit more to this Motorola deal than other pundits have been saying.

Yes, it has a lot to do with patents and that might well explain Google’s goofy bidding behavior during the recent Nortel patent auction. Maybe Google already knew it was going for Moto at that point. Certainly with these 17,000 patents plus the $1 billion worth of patents acquired from IBM, Google can go toe-to-toe with Apple or anyone else in an IP battle. Cross-licenses of certain mobile technologies would certainly appear to be in the future for many of these companies.

And cross-licenses represent another important aspect of MotoGoogle that generally hasn’t been noticed — Motorola’s Java license. Oracle, the new owner of Java and all the rest of Sun Microsystem’s old IP, has been beating-up on Google in court, claiming the search giant has stolen Java technology. Not anymore. If this Motorola Mobility deal goes through (and I think it will) then Oracle loses grounds for its lawsuit, which is part of why Google is even doing the deal.

Okay, so Google is going into the phone business. Of course they are going to run the company as a separate business since that’s about the only way to spin the inevitable negative impact the deal will have on Google’s gross margins. Only Apple makes big margins on hardware and while MotoGoogle would like to be Apple, it isn’t.

What does this mean for Google Voice? I haven’t heard this question asked yet. If Google wants to sell phones they’ll mainly do so through the mobile carriers and every one of those carriers is threatened by Google Voice’s potential to disintermediate them and steal their revenue. I’m sure the carriers will ask for Google Voice to go away as a condition for handling MotoGoogle phones. It wouldn’t surprise me, either, if this turn of events for Google Voice surprises Google, which is a very smart company with occasional blind spots.

I think the deal is going to shake up the mobile voice and data businesses generally. And this might not be the end of it, either. What if, for example, Google mounted a bid for T-Mobile? Why not? Yes, it would be expensive but such a move would level the playing field in even more ways, giving Google a 4G network they could really use, shaking-up the incumbent carriers in the process.

What if, what if, what if… Google TV is so far a failure, but this deal could shake that up, too, with MotoGoogle perhaps entering the set-top box business. Certainly Motorola has technology to contribute and what will be interesting to see is how the business shakes out as a result.

This is a bold move on Google’s part. Not a bet the company move, but the move of a confident Larry Page who knows that bold action is required. He has guts, that boy.  And I think it is going to be fun to see how this plays out.

The players in this drama are Apotheker, various HP executives, and the HP board, with the important bit of information being that the board has changed substantially in composition since Apotheker was appointed last year. It’s a new board.

Leo Apotheker was a dark horse candidate to run HP. He’s German, comes from an enterprise software background at SAP, the big German software company, and has no history in hardware. All previous HP CEOs have been American, most came up through the company, and all but Carly Fiorina had clear backgrounds making and selling the kind of hardware HP is known for. Fiorina, of course, came from Lucent Technologies and sold into the telco market where HP is not a player. Still she had a background selling big iron.

That the HP board chose Apotheker wasn’t such a surprise given the mood of that board, which was trying to fight against its own bad reputation for infighting and poor conduct (hiring private detectives and unethically gaining access to board member private phone records), bad hires (Fiorina), and worse hires (Mark Hurd). That board felt they needed a new CEO who was clearly different from both Fiorina and Hurd and came from a C-level job at a leading technology company.

Apotheker certainly qualified on those terms with the only downsides being his lack of hardware experience and that he’d been fired from SAP after only seven months. But heck, he was available.

And the guy might have succeeded but for two events beyond his control — the Oracle lawsuit against SAP, in which Oracle tried to call Apotheker as a witness, and former eBay CEO Meg Whitman’s loss in her run for governor of California.

SAP didn’t want Apotheker to testify in the lawsuit over SAP’s admitted theft of copyrighted Oracle materials and HP didn’t want their new CEO dragged into it either. So at just the moment when new CEO Leo should have been knocking back brewskies at HP Friday beer busts, proving to the company that he was a real engineer, Apotheker was instead on the lam to avoid being served with a subpoena, orbiting in an HP jet anywhere but Silicon Valley. This hurt Apotheker and HP and didn’t help SAP all that much, either, since that company ended-up having to pay more than $1 billion in damages to Oracle.

On the chickenshit-horseshit-bullshit spectrum, Apotheker hiding from the court was definitely chickenshit behavior that probably reflected the old HP board and hopefully not the new one.

That lawsuit is history, but the damage to HP and Apotheker lingers. Now add to that HP’s weak earnings and its warning just this week of soft earnings to come and Apotheker’s position is further compromised.

Then someone remembered the SAP employee survey just prior to Apotheker’s firing there where he was shown to be distant and unpopular. And while he’s not yet viewed broadly at HP as distant and unpopular, neither is he close and popular. He’s still an enigma to most employees. And Apotheker will get no help from the HP executives who were passed-over to hire him.

Then there’s Meg Whitman, who expected at this point to have resigned from the HP board to spend all her time running California as governor. But that didn’t happen, so now what is she to do? You can only get so many pedicures. She’ll eventually get around to hip-checking Apotheker and taking his job. Meg can knock back brewskies as well as any man and will probably fill those CEO shoes even better than Apotheker.

I know I am speaking early about this but that’s why I get the big bucks.

There is only one chance Apotheker has to save his job and that’s by buying his old company, SAP. A merger would transform HP, instantly making it a power in enterprise software, much more competitive with both Oracle and IBM, and strongly emphasize Apotheker’s strengths.  Enterprise software right now is less than five percent of HP’s total business and that has to change if Apotheker is to survive.

So Apotheker could make a bold move, transform the company in his own image, and save both his job and the day. But I don’t think it will happen because SAP is on a roll and getting more expensive by the day. At more than $60 billion, it’s probably too expensive now for HP to buy.

It might have worked had Apotheker bought SAP on his first day of work at HP but he didn’t know then what trouble he was in. Now it is probably too late. And while his end, I think, is inevitable, it should also be very entertaining because Meg Whitman will take out Leo Apotheker with some real boardroom flash and style.

Remember you read it here first.

I was thinking about Larry Ellison while preparing next week’s 2011 predictions column. What an extraordinary guy! I’m pretty sure I couldn’t work for him (nor would he hire me) but I have a lot of respect for Larry. For one thing, he doesn’t give a damn about what you or I think of him or his company, which I find refreshing. A few years ago I did back-to-back interviews with Carly Fiorina and Larry Ellison and the difference between the two was like they shared no DNA at all. They were from different galaxies. Or if we limit ourselves strictly to Broadway, Fiorina was Woman of the Year while Ellison had the lead in Glengarry Glenn Ross.  I came away knowing almost nothing about Fiorina while Ellison revealed his underwear brand (Munsingwear).

Larry Ellison is all about the pursuit of wealth, power, and personal experience. He is unabashed. Ask him a question and he answers. Where’s the strangest place you’ve ever done it? “On a riding trail in Woodside, CA.” Bam! Take that, Jack Welch.

This level of honesty doesn’t make Larry what most of us would think of as a nice person. I once heard him refer to having “nailed” a dinner companion, if you know what I mean and I think you do. But with Larry at least you know where you stand, with most of us standing, frankly, nowhere.

Larry knows his objectives and is willing to use whatever power he has to achieve those objectives, which makes Oracle’s ownership of the former Sun Microsystems especially interesting to me.

Sun was a company filled with very smart people who frequently stumbled upon success, and that was the problem. Larry doesn’t stumble and as a result he has in a very short period of time taken the former Sun to new successes in almost every market. This is the same Larry and the same Oracle, remember, which were expected to dismantle Sun and throw most of it away. Instead the former Sun is creating hell for HP and IBM and even causing murmurs of concern at Intel.

But here’s the most amazing part — almost nothing changed to accomplish this. Sun management left and have pretty much disappeared, but other than that the company remains largely intact. Certainly none of the new Sun products being touted by Oracle are Oracle designs — it’s too early for that. The difference in servers and processors and even Java is that Larry’s behind it all now and everyone knows Larry takes no prisoners.

Look at Java as an example. Java was mismanaged from the start: everybody made money from it except Sun. Oracle and Ellison aren’t about to put up with that BS about the world using Java and Oracle getting nothing in return. They’re happy to let freeloaders complain and leave. So Oracle displaced or disenchanted many Java community members when it tried inserting at least one big customer into the product mix. One called Hologic was a medical software company — an academic nobody injected into the technical direction of Java’s future. Oracle didn’t win the vote for this obvious Open Source sellout, but it shows the direction they are headed with the language, which is into a commercial orbit somewhere between Red Hat and Pluto.

I am not defending Oracle’s undermining of Open Source nor do I support it, but the company is at least being clear about its intentions and convictions. Customers like that.

There are plenty of businesses entrenched in Java that can’t easily change. And now Oracle can start charging them. Think about if Microsoft had suddenly owned Java. This is how Redmond would handle it, too. Then there’s the whole Oracle+Apple angle, but I’m saving that for next week’s predictions.

Sun ostensibly believed in free, open software. Oracle and Microsoft clearly don’t. Look where it got everyone.

We installed the servers — three little boxes and one big one — then fired them up.  In moments the site was live, though with only a few alpha clients.  The application, which I am sworn not to mention yet, is clever, but not particularly resource intensive.  It’s just like any other web site only a little different in several good ways.  The three little web servers just sat there blinking, doing their jobs.  But the bigger box (a 3u, versus the 1u web servers, if you are keeping track) was wailing right from the moment of booting.  Inside were three 15,000-rpm drives, a bunch of processor cores, and a ton of RAM — all of it thrashing away despite the small load.  What was going on?

What was going on was the twilight of enterprise application development as we know it today.  That 3u box was a database server that sits behind the three little web servers and makes this new enterprise work.  And work hard, apparently, for all the drive thrashing and lights blinking.

We’re at an interesting point in the development of computer technology.  Processors, having been failed somewhat by Moore’s Law in their attempt to become more powerful by widening data paths and raising clock speeds alone, have now resumed or even accelerated their performance growth by replacing one processor core  with 2, 4, 8, and eventually hundreds of cores, most of them not really needed.

Processing power isn’t what binds enterprise or Internet applications today.  I/O and disk access do that.  Servers have one or two gigabit Ethernet connections, each of which could be easily saturated by an old Pentium 4.  It’s the pipe that limits us, not our ability to pump bits through that pipe.  Thanks to the gamers, I suppose, and to a surreal and not particularly useful competition between Intel and AMD the main server CPUs are barely sweating even though they are running the core business logic of the application.  It’s the database server with its disk drives that is working so hard, grabbing data to feed the web servers seemingly just in time.  But don’t blame the hardware here or even the disk drives — blame the database.

We’re at the apex of SQL database development.  It’s 1890 and we make the best darned database buggy whips on Earth.

There is a better way to handle large volumes of data and that better way has been established, not surprisingly, by Google with its BigTable semi-structured database that essentially caches the entire Internet.  HBase from Hadoop is the Open Source version of BigTable and both are rapidly making old SQL databases like Oracle and DB2 obsolete for certain users.

Amazon.com runs on an Oracle database, but one that was extended and optimized at a cost of more than $150 million.  Amazon probably represents the most that one can do with SQL in terms of scalability.  Anything bigger requires a completely new approach like BigTable.

Or maybe it isn’t so new at all.  I recall something very analogous to BigTable during the network operating system wars of the 1980s.  Microsoft had a couple dozen OEMs working on network operating systems based on the hierarchical file system of DOS 2.0 (Paul Allen’s last technical contribution to Microsoft).  While a hierarchical file system may have made some sense for a workstation it made little to no sense for a server accessed by dozens of workstations in the view of the programmers at Novell, where Netware was being born at the time.  Those guys ignored the hierarchy and wrote the entire File Allocation Table for each drive to memory as a single flat file called an Indexed Turbo FAT.  Where the DOS-based network operating systems had to search the disk for files, Netware had the entire index loaded in memory and instantly knew where the target data could be found.  The system was easily 100 times as fast.  BigTable takes this a step further, I suppose, by ignoring the distinction between index and data, dramatically expanding the memory footprint but, at the same time, completely eliminating a retrieval step.

An irony of BigTable and Indexed Turbo FATs is that both Google and Novell were pretty upfront about what they were doing and why, yet competitors have remained bound to lower performing technologies because, well just because.

Which brings us back once again to Oracle buying Sun, a deal that has continued to bug me because it didn’t make sense… UNTIL I thought about it in terms of the scalability of SQL architectures and market positioning.

Right now almost every web application has an Apache server fronting a database box running MySQL or its closed source equivalent like Oracle, DB2, or SQL Server.  The data bottleneck in all those applications is the SQL box, which is generally doing a very simple job in a very complex manner that made total sense for minicomputers in 1975 but doesn’t make as much sense today.  Five years from now the situation will be very different with HBase running everywhere, the dedicated SQL box eliminated completely, and the database shared across redundant web servers like a micro-Google.

Where does this leave Oracle?

It leaves Oracle bleeding its big stupid corporate customers for another decade but eventually losing both the bottom half of the market and the very top where applications scale to tens of thousands of servers.

Part of the distinction here is between running a mobile phone billing system in one case and Facebook in another.  In the mobile phone example you’d better get all those minutes or money will be lost.  But in the Facebook example reality is more approximate and if an update propagates slower than expected, well big deal, so you missed Little Johnny’s birthday pictures for an extra 20 seconds.  There are even business software cases where this philosophy applies.  Progressive Insurance, for example, is always ready to give you a comparison price quote for auto insurance not because they can generate that quote (and the price quotes of their major competitors) on the fly, but because THEY GENERATE A SPECULATIVE PRICE QUOTE FOR EVERY CAR IN AMERICA EVERY NIGHT.  They don’t generate a quote when you call, they just access it because it is already done.

So Oracle keeps the mobile phone company as a customer but doesn’t keep Progressive in this example.  And in the long run there’s enough data redundancy built into the loosey-goosey HBase model that it becomes just as reliable as the more rigorous SQL model that it is inexorably replacing.  That’s when Oracle loses the mobile phone company, too.

Larry Ellison won’t like that.

So what’s to be done?  Buy Sun.  Get into the database appliance business.  Start selling highly-tuned database appliances that achieve the simultaneous goals of vertical integration (making profit on the hardware as well as the software), obfuscation (keeping the customers out of the lower-level code by encasing it in an appliance), and increased overall performance (putting off the inevitable loss of market dominance for another three years through a hardware tour du force).

IBM, as the other big SQL company, doesn’t really share Oracle’s problem, because IBM makes money from the hardware already.  If DB2 gives way to something like HBase, IBM will run HBase on its premium iron — a luxury Oracle can’t share without buying Sun.

As hardware gets cheaper we extend performance by distributing software across more and more machines.  But that distribution in itself undermines the lucrative software licensing system.  So we introduce a new level of abstraction — the database appliance.  Prices will go up a little while performance will go up a lot. Customers will think they are getting more for their money and they will be. But the ultimate comparison that has been at least postponed is between paid and free, where free always wins in the end.

And THAT’s why Oracle NEEDS Sun — to extend its current run by another three years, buying Larry time to write an Act II for his company.

IBM doesn’t want Sun and is gleeful with the idea of Oracle taking over, as you’ll learn if you read the internal IBM memo copied below.  Big Blue does a very good job here of explaining its thinking and most of it makes sense.  No white knight.

But what will Oracle DO with Sun?  Make a lot of trouble for IBM, or try to, I think, but even doing that will be a challenge.  Java is deliberately unprotected by patents and subject to enough industry oversight that Larry Ellison can’t just kill it or somehow make it proprietary overnight.  MySQL could be killed, but for Open Source that just means it would branch and be reborn a day or a week later mostly intact and protected by nerds who would by then be very, very angry.  On a positive side Oracle will undoubtedly make some very useful database appliances and may well come to dominate that as yet non-existent product space.

But for the most part what Oracle will do with Sun is show a quick and dirty profit by slashing and burning at a produgious rate, cutting the plenty of fat (and a fair amount of muscle) still at Sun.  If you read the Oracle press release, the company is quite confident it is going to make a lot of money on this deal starting right away.  How can they be so sure?

It’s easy.  First drop all the bits of Sun that don’t make money.  Then drop all the bits that don’t fit in Oracle’s strategic vision.  Bring the back office entirely into Redwood Shores.  The cut what overhead is left to match the restructured business.  Sell SPARQ to some Asian OEM.  Cut R&D by 80 percent, saving $2.4 billion per year.  I’m guessing sell StorageTek, maybe even to IBM.  And on and on.  Gut Sun and milk what remains.

The plan has to have been on the table since last Fall when Andy Bechtolsheim, the mine canary of Sun’s executive suite, left the company for the second time.  Even then it was clear that the options were a good sale or murder-suicide.

I blame Schwartz, of course, but I don’t blame him, too, because I think he had little choice.  He just wasn’t a lucky guy, it turned out.

So what’s next for Sun?  Nothing, I think.

Here’s the internal IBM memo on the deal:

PPublished on 21 April 2009
News home > Top stories >
Oracle enters a twilight zone

The acquistion of Sun creates opportunities for IBM.
The surprise announcement of the Oracle deal to buy Sun Microsystems creates
some new opportunities for IBM. Since its days as a bright star in the dot-com
era, Sun gradually lost its place in the UNIX server market it once dominated.
How does IBM stand to gain, if and when this transaction closes?
Momentum
First, momentum. According to IDC’s latest report, IBM’s share of the $17 billion
UNIX server market grew to more than 37% in 2008 while Sun’s share fell to 28
percent; since 2000 IBM has gained 19 points of share, while Sun has lost 7
points.
Since 2006, the number of clients that have migrated from Sun to IBM Power
Systems has grown 10% annually to more than 750 clients as of 1Q 2009. IBM’s
Migration Factory has eased the transition for these Sun clients to the Power
platform with its leadership performance and virtualization technologies. In
addition, IBM technologies such as its Infosphere Information Server have enabled
a steady stream of Oracle clients to migrate from Oracle’s high-maintenenace-fee
database to IBM DB2 and Informix data servers. The fact that Oracle and Sun will
share the same address does nothing to change these trends.
Openness
Second, openness. IBM offers every client the greatest choice and best value in
both hardware and software to meet their business needs. IBM will continue to
support Power Systems clients that have chosen Oracle’s middleware or database,
just as we will continue to support the IBM middleware and data server needs of
Sun server clients.
Oracle, after acquiring many software vendors partial to IBM server platforms, has
long promised to protect the compatibility of IBM servers, notably Power; Oracle
clients will continue to demand this compatibility moving forward.
Oracle’s self-serving interpretation of “open” sharply contrasts with IBM’s
championing of Linux and the broad open source community. Despite this, clients
committed to IBM middleware have forced Oracle to maintain long-term
compatibility with IBM software through previous Oracle acquisitions of IBM
Business Partners such as PeopleSoft and Siebel, and this bodes well for Java

News
4/21/2009

http://w3.ibm.com/news/w3news/top_stories/2009/04/stgswg_sunoracle.html

technology. Oracle is unlikely to make sweeping changes – it’s the subtle changes
we’ll watch for. MySQL, an open-source competitor to Oracle’s database that was
acquired by Sun last year, should pose an interesting test of Oracle’s openness.
Sun’s billion-dollar acquisition was hurting Oracle. If they kill MySQL they could
alienate the open-source community, which loved Sun. If they keep it, they may
not have the ability to capitalize on it.
Client confidence
Third, client confidence. IBM’s consistent roadmaps and disciplined delivery enable
clients to effectively gauge the long-term value of their investments in systems,
middleware and services. Sun’s much-publicized business problems will not be
erased in the minds of clients by the Oracle acquisition. If anything, significant
questions are raised. For instance, the omission of any mention of SPARC in
yesterday’s statements from Sun and Oracle is certain to make Sun hardware
loyalists very anxious about a future where Oracle is calling the shots.
Earlier this month the latest of a long line of executive departures from Sun was
its lead processor designer who headed development of Sun’s long-promised and
much-delayed next-gen RISC processor, codenamed “Rock.” The future direction
of Solaris in the hands of Oracle is also unknown, while IBM’s substantial
investments in the future of AIX and Linux are ongoing and well known.
Cost advantage
Finally, cost advantage. In today’s economy, clients are looking to reduce the
heavy maintenance costs associated with Oracle database use. IBM hardware and
software technologies together provide a significantly lower total cost of
ownership.
Several Wall Street analyst reports yesterday saw Oracle’s move as defensive in
response to a dwindling ecosystem. Other observers see the Sun deal as an
attempt to emulate IBM’s successful solutions strategy. However, Oracle’s ability
to manage this type of integration is unproven. Oracle’s remains an application-
led play while IBM has a thriving software ecosystem of application developers
and a much different acquisition style.
Whatever changes take place within Oracle and Sun, one thing that remains
unchanged is IBM’s position of strength and our proven ability to win against both
these competitors.
More details on the Oracle-Sun announcement are posted on the Market Insights
Web site .
For more information concerning this article, please contact Smith, Bruce P.
(brucesmi@us.ibm.com).