Larry Ellison wants you to know that his acquisition of Sun Microsystems isn’t a bomb and the hardware isn’t a dog, but a hugely profitable business that already paid for itself.Ellison looks at his hardware business and sees Apple.
Oracle wanted Sun so it could “do the same thing for the data centre that Apple did for the consumer, Ellison said while on stage today at AllThingsD’s D10 conference.
The plan was to make data centres less complicated by letting companies buy everything they need from Oracle. No need to spend millions with lots of different vendors, each specializing in their own tech like storage, servers, operating systems, databases and networks.
“We said, we’ll do all of that. We’ll sell you this one building block,” he says. “In fact it’s the Apple model.”
With an iPhone, Apple did the hardware, software, and associated online service, he says. “We’re trying to do the same thing for the data centre that Apple did for the consumer.”
And he insists that it’s working great.
“Sun has been, by far, our most profitable acquisition. Sun’s already paid for itself. We’re making so much money. Remember we only paid $5.5 billion dollars net, of cash, and it is enormously profitable already,” Ellison says.
As for those shrinking revenue numbers? Those are part of the game plan.
“A lot of people said, oh but your hardware business is going down. Well yeah, the unprofitable part we’re getting out of. We used to sell other people’s disk drives. We used to bid on contracts where we lost money,” he explained.
“The business has dropped maybe 20% in terms of top line but it’s up by a factor of five in terms of profit,” and he adds: “Our margins on our hardware business are probably the highest margins of anyone in the server business.”
Plus he promises, “Next year it will start growing again.”