Oracle faces culture shock in Sun's open source world

Larry Ellison is a famously activist exponent of competitive strategy. An avowed student of Sun Tzu's Art of War, the Oracle chief executive has long followed an approach that sets Oracle's interests against those of its main rivals, with Microsoft, IBM and SAP cast as the enemy.

With the acquisition of Sun Microsystems, however, he is about to walk on to new terrain where some of the methods that defined Oracle's traditional approach to strategy no longer apply.

Sun's main software assets - and the jewels for which Mr Ellison said this week that he had agreed to pay $7.4bn for the company - are all closely tied to the open source world: the Java programming language and development tools, which are partly open source, as well as the Solaris operating system and MySQL database.

That makes them unlike the roughly 200 software properties that Mr Ellison has acquired in the past. They are made freely available, and rely partly on the efforts of a wider group of developers to extend and support them. Their future success, in fact, relies on a technology community that stretches well beyond Oracle - and includes companies such as IBM, which also relies on Java as a core technology

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What Oracle stands to gain from open source

On Thursday Oracle, one of the strongest enterprise software vendors, reported weak earnings, as reported by The Wall Street Journal. Most troubling is Oracle's first year-on-year decline in new software sales in five years, with license revenue falling by 3 percent from 2007.

Some of Oracle's struggles relate to a strengthening dollar, as CNET suggests. But with more than half of its revenues coming from maintenance, Oracle needs to forage for new customers paying for new license deals, rather than simply consolidating the industry to buy its way into new customers.

In short, Oracle needs to expand its open-source strategy.

By this I'm not referring to Oracle's work with open-source projects. Though I've harshly criticized Oracle on this score in the past, Oracle contributes significant resources to advance a range of open-source projects, as it details in its "Oracle Corporate Citizenship Report 2008" (PDF):

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