HP’s lawsuit against Oracle headed to court today. But in the court of public opinion, HP is already losing—and losing real money, too.Oracle doesn’t want to keep making its flagship database software for HP’s super-expensive, super-high-margin Itanium servers.
We can’t predict how the court will rule, but it looks like Oracle is winning the PR battle. Since Oracle declared that it would ditch Itanium (in March 2011), HP has already lost about a half-billion dollars in server sales, reports the San Jose Mercury News. And if Oracle wins, HP could be out $4 billion in sales by 2020, the Merc says.
It’s not just about the revenue. Itanium is one of HP’s highest-margin server products. We’ve heard employees refer to it as a “cash cow” business for HP.
Don’t forget that HP is up to its elbows in problems, laying off 27,000 workers—9,000 of them this year.
If Oracle is allowed to drop Itanium, that could pretty much kill the cash-cow server. Running big database software is pretty much the reason why people buy those servers. Microsoft and Red Hat have said they would stop making software that runs on Itanium.
Last month, Oracle took the fight straight to enterprise customers, releasing a bunch of emails trying to convince them that HP lied to them, and that Itanium was secretly on its deathbed. HP denies this. It is apparently paying Intel to keep making Itanium chips, which it helped design.
So HP turned around and did the same, releasing a bunch of emails of Oracle execs slamming its recently acquired line of Sun Microsystems servers. One top Oracle sales exec was caught calling Sun hardware “a dog,” according to documents submitted as evidence by HP in the trial.
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