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Oracle execs flutter kimonos in front of analysts

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Oracle boss Larry Ellison said he'd love to have the 60 per cent of NetApp's business that plugs NetApp boxes into Oracle software, hinting that a NetApp purchase could be on his mind.

The Oracle boss has also hinted that a chip maker could be on his buy list, as he looks to build-out his stack-in-a-box vision.

He was speaking to analysts at a meeting yesterday and responded to questions about mergers and acquisitions in storage and networking. According to Aaron Rakers, a Stifel Niclaus analyst, Ellison said that Oracle will need differentiation in the high-end storage business in which it competes. He added almost immediately that some 60 per cent of NetApp's business is in the area of storing Oracle database data, and then said:

We [Oracle] love that business. We would love to have that 60 per cent. Do we need to acquire? I think there are some interesting technologies we’d like to acquire … I think it is possible.

There you have it, as plain as a pikestaff: NetApp, as far as Oracle is concerned, is in play.

Oracle told the analysts it has a high-end and mid-range storage strategy. Its Exadata storage positioned against EMC's VMAX and Hitachi Data Systems USP-V (soon to be VSP, we understand) in the high-end enterprise block array market. The Exalogic and Exadata products use embedded Sun 7000 storage technology. In the mid-range the 7000 is the product and it competes in the unified file and block storage market against NetApp. We're conscious it also competes against EMC's Celerra and coming unified CLARiiON/Celerra line.

Oracle is seriously convinced that having separate server, storage and networking silos is rapidly becoming a thing of the past. Co-president and Oracle newbie Mark Hurd said: “[We need to] think about the consolidation of servers, storage, and network capability … I don’t think the market will be here over the next five years in traditional silos of servers, storage, and networking.”

The company is not interested in individual storage arrays but in storage infrastructure systems, and it wants to leverage its Sun ZFS technology. The Oracle and NetApp lawsuits against each other around ZFS were mutually dismissed a few days ago.

Extending the logic of Hurd's pitch suggests that Oracle will have to strongly bulk up its networking capabilities as well, and that implies acquisitions in that sphere.

According to a Reuters report, Oracle is also looking at chip makers, with Ellison saying: "Our focus is to build our [intellectual property] portfolio ... You could see us buying chip companies. Silicon is very important."

Oracle's CFO Jeff Epstein also banged the acquisition drum, saying: "We will continue to invest heavily in internal research and development and we'll continue to make small acquisitions and large acquisitions to acquire great products, great R&D."

Returning to Netapp, the company is capitalised at $17.24bn, an eighth of Oracle's $136.34bn - Ellison clearly has the financial fire power to mount a NetApp bid. NetApp shares are trading at $48.29 and haven't skipped a beat since Ellison made his comments.

NetApp is pushing the idea of best-of-breed storage technology and the advantages of having a dedicated focus. So too did 3PAR but it has changed its tune now that it is part of HP.

A combination of Oracle and NetApp would be a truly formidable server/storage play, even if the IBM NetApp reseller deal subsequently collapsed. Will Oracle actually make an approach? Will NetApp respond positively? The key there is whether it truly believes an independent, best-of-breed stance is viable or whether the stack-in-a-box, centralised IT approach is a sustained tank attack that threatens to flatten its business.

A future inside Oracle in those circumstances might look a lot better than a slow fade into a Unisys-like state while EMC, buoyed up with VMware and products above raw storage arrays, grows and prospers. ®

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