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Intel Gets Squeezed in HP, Oracle Spat

The truth, it seems, has too many shades even when clarity is most needed. Just ask two combatants in the software market and the chip vendor they are squeezing between them.

{complink 4092|Oracle Corp.} says it understood from {complink 2657|Intel Corp.} management the company's Itanium server chip “was nearing the end of its life.” That's not the case, insists Paul Otellini, CEO at Intel, the world's biggest semiconductor company by revenue. Intel's work on “Itanium processors continues unabated with multiple generations of chips currently in development and on schedule,” Otellini said in a statement.

Oracle did not identify whom it spoke with at Intel, but the applications and software vendor company has now decided to discontinue all software development for the Itanium processor after “multiple conversations” it reportedly had with the management of the semiconductor manufacturer. “Oracle will continue to provide customers with support for existing versions of Oracle software products that already run on Itanium,” the company said in a statement. “Hewlett-Packard CEO Leo Apotheker made no mention of Itanium in his long and detailed presentation on the future strategic direction of HP.”

That makes things a bit clearer, doesn’t it? Oracle isn't itself dissatisfied with Intel's Itanium, and it certainly has no beef with Intel itself. The company had a different target in mind. It was aiming at {complink 2376|Hewlett-Packard Co.}, a major supplier of servers that use the Itanium processor and a direct competitor of Oracle-owned Sun Microsystems' Sparc processor.

It should be noted that Oracle CEO Larry Ellison was so miffed with HP's decision last year to fire its CEO, Mark Hurd, over some expense report discrepancies and a concealed relationship with a contractor, he hired Hurd as co-president of his company.

The simmering disagreement over the Hurd controversy and continuing encroachment on each other's turfs — HP is extending itself into the software space while Oracle's acquisition of Sun thrust it into the server hardware market — has now spilled over into the supply chain and smacked Intel right in the gut. Oracle noted in its statement that {complink 3426|Microsoft Corp.} and {complink 4610|Red Hat Inc.}, two of its competitors, have also stopped developing software for Itanium but did not say specifically that halting support for the processor was hurting its operations.

In fact, Oracle was doing fine, both with its traditional businesses as well as in the software development for the Intel product. The company, however, needed to push more of its own hardware product, and I believe this is perhaps the best justification for its Itanium action. Of course, it also had the added benefit of tweaking HP's nose. While Intel might object to Oracle's action, it is unlikely this would hurt the business relationship between the two companies. It's expected that Oracle will continue to support Intel products, including other server processors.

HP might be the biggest loser here, but the dent might be unnoticeable. It quickly announced continued support for Itanium-based HP server products “using a roadmap that extends more than 10 years.” Then it followed up with allegations Oracle was smarting from loss of market share by Sun Microsystems.

“Oracle continues to show a pattern of anti-customer behavior as they move to shore up their failing Sun server business,” said Dave Donatelli, HP's executive vice president and general manager, Enterprise Servers, Storage, and Networking. “HP believes in fair and honest competition. Competition is good for customers, innovation, and the marketplace. We are shocked that Oracle would put enterprises and governments at risk while costing them hundreds of millions of dollars in lost productivity in a shameless gambit to limit fair competition.”

Intel, meanwhile, cannot afford to publicly support or reject either of the two combatants. The chip vendor will have to work quietly behind the scenes to extricate itself from a turf battle it should never have been dragged into.

5 comments on “Intel Gets Squeezed in HP, Oracle Spat

  1. Ashu001
    March 24, 2011

    Bolaji,

    As you so rightly point out here,

    “Intel, meanwhile, cannot afford to publicly support or reject either of the two combatants. The chip vendor will have to work quietly behind the scenes to extricate itself from a turf battle it should never have been dragged into.”

    Intel is in big-big trouble here.Alienating either one of these two goliaths is a Big No-No.So they should just sit tight and play it safe.One of these two combatants is going to opt out very,very soon.My money is on Oracle.

    Regards

    Ashish.

  2. Ashu001
    March 24, 2011

    Bolaji,

    As you so rightly point out here,

    “Intel, meanwhile, cannot afford to publicly support or reject either of the two combatants. The chip vendor will have to work quietly behind the scenes to extricate itself from a turf battle it should never have been dragged into.”

    Intel is in big-big trouble here.Alienating either one of these two goliaths is a Big No-No.So they should just sit tight and play it safe.One of these two combatants is going to opt out very,very soon.My money is on Oracle.

    Regards

    Ashish.

  3. Hardcore
    March 24, 2011

    Yes an interesting article.

    Agreed that  Intel just needs to play a bit daft here, purely for maintaining the long term relationships, but that said, there are really not that many 'players' operating in the processor market, possibly Motorola or AMD/ ARM?, the other people are a bit small for people to start heavily investing in critical business servers running potentially unproven CPU designs.(Oracle fixed that when it purchased Sun and the openSparac platform)

    AMD do not really have chipsets that can complete at the same level as Intel in the Server markets, AMD came very close a few years ago to 'beseting' Intel but it seems recently the fire has left AMD.

    The openSparac initiative looked to be a really strong prospect for future CPU technology because it allowed you to take an FPGA, and load in an industrial grade processor for multicore processing.

    To upgrade you just rolled in a new FPGA, all the software would be fully compatible, because the central core was still Sparac

    I just wonder if Oracle has something planned with the Sparac technology that may impact intel later , IE if they switch over to FPGAs to support the databases then that would impact both Intel & HP.

    HC

     

  4. DataCrunch
    March 25, 2011

    Oracle just reported a very strong fiscal third quarter with a rise in net income by 78 percent.  Both software and hardware, specifically from the Sun acquisition contributed to the increase in revenue.  Oracle was able to receive higher margins providing its own hardware versus using selling third party hardware.  Oracle also provided a strong outlook and guidance on its business.   Looks like the Sun acquisition is actually paying off for Oracle… so far.

  5. t.alex
    March 25, 2011

    Yes, the acquisition of Sun enhances Oracle position as a full-scale service provider from hardware, OS, to application. This left competitors with little choices, including those who already have adopted Sun OS previously.

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