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Oracle promises golden trip to yesteryear on Sun

Like 1960s IBM. But 'open'

hands waving dollar bills in the air

Oracle's promised to take computing back to the 1960s by investing in Sun Microsystems' products and integrating them with its own software.

Calling IBM the "gold-standard" for stable and reliable computing during those early days, Oracle president Charles Philips said Wednesday morning that his company would achieve its goal using "open systems" through its acquisitions of fellow Silicon Valley giant Sun.

To achieve that, Phillips committed to a massive increase in Oracle's R&D budget to $4.5bn, nearly 20 per cent of annual sales - the biggest in the Valley.

This will help re-energize the Sun name and "key assets," Phillips said, singling out Solaris and Java.

"We are going to make Sun the gold-standard for computing for servers under our products," Phillips told customers, partners, press, and analysts at Oracle's Redwood Shores, California campus.

According to Phillips, the IBM model of the 1960s broke down because of growing fragmentation in technology. He was, of course, referring to the previously closed world of IBM-based mainframes running IBM software and staffed by IBM administrators.

Phillips' message re-stated the mantra that's been consistently coming from Oracle and Sun to justify the acquisition: that the new Oracle will deliver integrated systems.

For Oracle, that means integrating its existing products in applications, database, and middleware with the components that it lacked in storage, servers, virtualization, and operating systems that come from Sun. In other words: systems

Accordingly, Phillips conjured up the phrase evoked by all systems companies partnering together for at least the 20-or-so years of computing: one throat to choke.

"Instead of all the finger pointing - we will take responsibility," Philips said.

Straight out, Phillips tackled one area Oracle has taken flack on and where observers have strong doubts: Oracle's lack of reputation in research and development. Sun, by contrast, is famed for its collegiate atmosphere and reputation for experimentation and research.

Sun spent more on R&D as a per cent of net revenue - 13 per cent - compared to rivals IBM and Hewlett Packard, which where are in the low to mid-single digits range.

Phillips committed Oracle to spending 19 per cent of its total annual revenue on R&D, based on fiscal 2009 - the most recent annual numbers - in the aftermath of Sun.

In Oracle's fiscal year 2011, it will spend $4.5bn on R&D, up from $2.8bn in 2009. That compares to a steady $2.7 to 2.8bn in the years before. Phillips pointedly compared the increase to Oracle's R&D around the time of its PeopleSoft acquisition: $1.5bn.

"If you invest in product and people have a better experience than before, the complaints [people had] to away," Phillips said drawing comparisons with Oracle's investment in PeopleSoft and the other applications it's bought since 2005. "We will do the exact same thing in Sun." ®

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