Oracle details plans for Sun integration

Oracle co-president Charles Phillips confirmed 2,000 lay-offs

Oracle has detailed its plans for the merger with Sun Microsystems in a special event for partners and customers.

Oracle co-president Charles Phillips said that the company is investing heavily in the deal, upping research and development spending to $4.5bn (£2.7bn).

Phillips confirmed that there will be around 2,000 immediate lay-offs, but that Oracle will be hiring 2,000 engineering and sales staff.

"We will have margin-based compensation plans, pushing people to more profitable products," he said. "We will pay you better than you are making now. Give us a call."

However, Oracle said little about personnel changes in the future and is clearly looking to make savings with some cuts.

On the hardware side, Oracle plans to cut back on the 50-plus server models Sun currently has on offer, and will focus on the UltraSparc platform for high-end enterprise customers, the M Series servers and Solaris-powered systems.

Sun's existing x86 line is also expected to be cut back. Phillips said that the company is happy to leave the x86 server market to Dell and will concentrate on higher end systems.

The company is looking to merge the hardware side of Sun with its software strengths to create a single integrated system that it can sell to companies, particularly large enterprises.

Oracle will take over direct control of Sun's 4,000 largest accounts and will reconfigure the salesforce to push the combined offering more aggressively in the future.

"Oracle's decision to bring Sun's 4,000 biggest and most profitable customers in-house is likely to complicate its relationships with Sun's channel and other partners," said Charles King, founder of analyst house Pund-IT.

"Conventional wisdom suggests, probably quite correctly, that Oracle will use Sun's technology and human assets to better compete in the world of increasingly consolidated enterprise systems vendors.

"But what will eventually define the success or failure of the deal is whether Oracle uses the Sun acquisition to evolve into an essentially new and more innovative organisation. On that point, the jury is still out."

The position of outgoing Sun chairman Scott McNealy has been left open, and Oracle made no mention made of a future role. However, in light of his memo to staff yesterday it seems unlikely that he will stay for long.