IBM Attacks Oracle With Sun Processor Bounty

IBM is gearing up to profit from what it sees as a coming paralysis in the industry stemming from Oracle’s pending acquisition of Sun Microsystems.

The company announced a further commitment to its Sun migration program — a bounty-based effort that offers customers $8,000 worth of software or services per processor if they trade in Sun hardware.

That’s up from the $4,000 IBM (NYSE: IBM) offered at the start of the year and the $1,000 the program initially promised when it debuted in the middle of last year.

The per-processor payout can’t be redeemed for cash but it can be spent on IBM consulting services, such as training on AIX, or on other services such as energy consulting and virtualization assessments, or on Tivoli licenses.

The move seeks to capitalize on what IBM says is concern among Sun’s (NASDAQ: JAVA) business partners about Oracle’s (NASDAQ: ORCL) looming role.

“This is absolutely related to the acquisition of Sun by Oracle,” said Scott Handy, vice president of marketing and strategy for IBM Power Systems. “We got reports from the field when the deal was announced and we saw a window of opportunity.”

“Oracle never had a great track record with business partners,” he added. “I just got back from China last week and I did not intend to call on the ISVs but they had questions.

As a result, IBM is putting up more cash to get a crack at customers, which it said gives it a chance to show how its systems save them money.

“We could calculate — and this is a real-world example — that a company could move thirty-four Sun V890s to just two PowerSystem Power 570 servers on one rack, moving from 544 processors to 64 processors,” Handy said. “Since most ISVs charge per core for software, we can dramatically reduce costs for the OS. ISVs also charge per-core for maintenance.”

Energy savings in deployments of this size add to the savings, he added. In the deployment he described, the energy savings were worth $195,000 per year.

Sun and Oracle did not return requests for comment by press time.

Attacking the channel

IBM sees itself renewing its fight against Sun from a position of strength. The company points to an IDC report that showed that IBM is the only major Unix vendor to gain revenue share during the last five years. Competing with IBM’s AIX, Linux, and i operating environments are HP’s HP-UX and, of course, Sun Solaris.

To IBM, Oracle changes the balance of power in the Unix market — in IBM’s favor.

“IBM, Sun, and HP have about 90 percent of the Unix market, and none of us are in the application business,” Handy said. “Now, with a very large ISV as a potential acquirer, one of these platforms is no longer neutral.”

Yet migrating from Sun to IBM is far from simple, Handy said. Of course, anything that runs on Unix runs on IBM’s Unix, but it might need to be recompiled. That, plus training, could take two or three days and requires planning.

Some channel partners will want to know whether they would bear the burden of the trade in program, and Handy was eager to explain that’s not the case.

“If a business partner provides services under the program, we write a check to the business partner,” he said. “We’re now talking to Sun partners and saying, ‘You’re in a shrinking ecosystem. Migrate to PowerSystem and we’ll pay you for migration services.'”

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