The announcement this week of Oracle acquiring Xsigo did one thing: it put the focus of enterprise computing back onto Oracle for a brief moment. A number of excellent posts were written on it, including:
- Brad Casemore (Twilight in the valley of the nerds)
- Greg Schulz (StorageIO)
- Howard Marks (Network Computing)
- Chris Evans (The Storage Architect)
- Enrico Signoretti (Juku)
- Greg Knieriemen (SpeakinginTech)
The dollar amount was undisclosed, but Chris Mellor from The Register figures it was around $800 Million, but I’m not so sure. Xsigo didn’t have many customers, which means the company probably had a financial crisis looming and needed to get the best deal it could before running out of time.
The acquisition is more opportunistic than strategic. Assuming Xsigo was looking for an acquirer, Oracle may have felt it needed to make a premature decision and not miss out on something they might regret later. That would explain the confused messaging around the acquisition where some thought it was an SDN play and others saying it was part of Oracle’s cloud strategy. I can assure you that Larry Ellison laughed out loud reading comments about this being a cloud play.
Oracle could care less about Xsigo’s customers – they already have enough of their own. Its all about Oracle now. Xsigo’s products will be discontinued and Xsigo employees not involved with technology development will be let go.
As for this acquisition being a cloud play – it’s not. There are still things that happen in this industry that have nothing to do with the cloud. As others have written, Xsigo technology would most likely be used with Oracle’s Exasystems as a virtual data center fabric component. If Oracle wants to sell more Exasystems they need to make them more flexible and easier to manage and Xsigo can help do that. The problem is that most people building clouds are doing it with different technologies than Oracle’s expensive Exasystems.
So cloud is not the opportunity, data centers are. The ROI from this acquisition depends completely on Oracle’s ability to sell more Exasystem products to people running data centers. Xsigo’s role is to help generate a faster ROI from their Sun acquisition. Maybe Oracle will break even on Sun, but they have a long ways to go. Nonetheless, this is something Oracle is extremely good at – selling high-margin products to large, captive, mature markets.
Where cloud is concerned, Oracle needs to figure out what to do about Hadoop, the open source compute/storage technology that was pioneered by Google, set free by Yahoo and now has several competitive distributions. Hadoop is the technology of choice for most IT professionals working on Big Data analytics applications and it is highly unlikely there is much Oracle can do to compete with it. Cloud customers can create huge Hadoop applications on Amazon and Google today for far less money than they can build out an Exasystem data center. Hadoop won’t be used for every application in the cloud, but its going to be used for a lot of things people have associated with traditional databases over the years. People wondering about Oracle’s business in the cloud are advised to watch the Hadoop space and any moves Oracle makes related to it.