Daily Archives: October 12, 2009

Ellison Tosses Red Meat to Faithful at Oracle OpenWorld

In their candor and substance, Larry Ellison’s remarks at a recent Churchill Club event in San Jose were infinitely superior to the shuck-and-jive partisan proselytizing he did last night at Oracle OpenWorld in San Francisco.

Then again, Oracle OpenWorld is a partisan event, where the faithful gather for reaffirmation and inspiration. So it was only to be expected that the Oracle CEO would erect, then systematically rip apart, a competitive straw man for the amusement and edification of his followers.

His target this year was IBM, which has been doing considerable damage to Sun Microsystems’ grip on its installed base of server customers. The reason IBM is able to plunder everything under the Sun (if you’ll excuse the pun) is because Oracle’s pending $7.4-billion acquisition of the latter is mired in an extended review, which could go well into January, by regulators at the European Commission.

During this review period, Oracle is losing tine and money, which usually amount to the same thing in business. By Ellison’s own admission, in his frank talk at the Churchill Club, Sun is losing $100 million per month as the two companies await definitive merger approval.

Losses on that scale make a man irritable.

That is why, even as he anticipates that the acquisition eventually will be approved, Ellison has no recourse but to don the verbal brass knuckles. He must masquerade an anxious defensive maneuver as a confident offensive thrust. But if anybody can do it, Ellison can.

IBM serves as a convenient punching bag. Like Microsoft, it’s an unalloyed competitor to both Sun and Oracle. Neither Oracle nor Sun has any use for IBM. That’s not the case with HP or Cisco, which figure to be future competitors of an Oracle-Sun combination. Those vendors have value as near-term partners, or, at the very least, as neutral parties.

Ellison wants to steer clear of fighting on more than one front. You might have noticed that he likes to isolate his adversaries, not picking a scrap with more than one at any given time. It’s a wise course, strategically and tactically. It’s also a bit of a feint, because Ellison knows — if his Sun strategy is pursed to its logical conclusion — he’ll be competing against not only IBM, but against Microsoft (with MySQL), against HP (in server and perhaps network hardware), and against Cisco (in the converged data center).

But, hey, why fight those battles now? Put the focus entirely on IBM, because that’s one of the companies, along with HP, poaching Sun hardware customers in the here and now.

I suppose Ellison’s speech to the loyalists at Oracle OpenWorld served its purpose. It had enough bon mots and red meat to keep them sustained and coming back for more. Even so, Ellison was playing a role, one he knows well. He talked a lot, but he said nothing new.


Morgan Keegan Analyst Positive on Nortel-Boosted Ciena

A Reuters report cites a Barron’s article in which Morgan Keegan analyst Simon Leopold suggests that Ciena shares could nearly double in the next year. (Yes, that was convoluted, but I wanted to provide proper attribution for all the sources.)

Leopold believes improved conditions in the telecommunications sector and greater scale as a result of Ciena’s pending acquisition of Nortel’s Metropolitan Ethernet Networks (MEN) business will boost the company’s fortunes.

Ciena doesn’t have Nortel’s assets yet, though. Ciena’s $521 million stock-and-cash offer is a staking-horse bid in an auction process that allows competing bidders to stake their claims. So far, no other company has leapt into the auction ring, and there’s good reason to believe Ciena’s bid will prevail.

Nonetheless, the slight chance of a competing bid remains. Many analysts believe Ciena can financially support the Nortel acquisition at the current price, but they would be less likely to advocate the purchase if that price were to increase appreciably.

At one time, Nortel’s MEN assets were considered its “crown jewels,” and some observers estimated they might fetch as much as $1 billion at auction.

Sidekick Fiasco Reflects Poorly on Microsoft

A service disruption last week for T-Mobile USA subscribers using Danger (now Microsoft) Sidekicks turned into something much worse, with reports surfacing that Sidekick-wielding customers have suffered irrevocable data loss as a result of a Microsoft server outage.

A notice posted on the T-Mobile website this weekend said, in part:

Regrettably, based on Microsoft/Danger’s latest recovery assessment of their systems, we must now inform you that personal information stored on your device – such as contacts, calendar entries, to-do lists or photos – that is no longer on your Sidekick almost certainly has been lost as a result of a server failure at Microsoft/Danger. That said, our teams continue to work around-the-clock in hopes of discovering some way to recover this information. However, the likelihood of a successful outcome is extremely low. As such, we wanted to share this news with you and offer some tips and suggestions to help you rebuild your personal content. You can find these tips in our Sidekick Contacts FAQ. We encourage you to visit the Forums on a regular basis to access the latest updates as well as FAQs regarding this service disruption.

In addition, we plan to communicate with you on Monday (Oct. 12) the status of the remaining issues caused by the service disruption, including the data recovery efforts and the Download Catalog restoration which we are continuing to resolve. We also will communicate any additional tips or suggestions that may help in restoring your content.

We recognize the magnitude of this inconvenience. Our primary efforts have been focused on restoring our customers’ personal content. We also are considering additional measures for those of you who have lost your content to help reinforce how valuable you are as a T-Mobile customer.

We continue to advise customers to NOT reset their device by removing the battery or letting their battery drain completely, as any personal content that currently resides on your device will be lost.

So, barring a last-minute data-recovery miracle, Sidekick users are up excrement creek without the aid of a propulsive instrument.

Who is to blame for this fiasco? T-Mobile has pointed the heavy finger of blame at Microsoft, and it’s difficult to quibble with that judgment. Even if the server outage, and consequent collapse of the Sidekick network, resulted from a failed upgrade involving a Hitachi SAN — as has been rumored — Microsoft must take the blame completely and unreservedly.

Since acquiring Danger for $500 million in 2008, Microsoft owned not only the acquired company’s assets, including the Sidekick, but also the responsibility for taking care of them. Given that Danger engineers have been bolting from Microsoft as if they were fleeing a burning building — and considering that Microsoft never seemed to have a coherent integration strategy for the Danger assets it obtained — I suppose this latest debacle shouldn’t come as a complete surprise.

Still, how can a company such as Microsoft not have server redundancy and failover in place for any online service offered to the paying public? It’s inexcusable, even inexplicable.

The more conspiracy-minded among us might be forgiven for thinking that Microsoft, having concluded that it had no good plan for Danger’s assets, wanted to kill the Sidekick while casting aspersions on the whole idea of cloud computing.

Usually, though, the simplest explanation is the correct one. In this case, the simple explanation is that Microsoft was derelict, incompetent, and negligent — but not malicious.

I suppose the entire shambolic episode demonstrates that Microsoft just didn’t care about the Sidekick or those who used it. The software giant, which never has been particularly adroit at addressing consumers’ desires, treated Sidekicks’ users with an indifference bordering on disdain. How else to explain the lack of server redundancy or the dearth of adequate support resources?

For a long time, I’ve held that Microsoft needs to look in the mirror and recognize its own image: a strong business-software company with pretensions to consumer greatness. Drop the consumer pretensions, Microsoft. You and your shareholders, in the long run, will be all the better for it.

In the meantime, we can only wonder how well Danger would have fared in other hands, or how much more good would have resulted if Microsoft had transferred that $500 million to Bill Gates’ philanthropic efforts; or, less exaltedly, to shareholders as dividends.

Because, make no mistake, this probably marks the end of the Sidekick, and — for all intents and purposes — of what little remains of Danger, too.

Brocade Acquisition Doubted by Oppenheimer Analyst

While many took the leak bait and assumed Brocade Communications Systems would be acquired imminently, others took a step back and analyzed the situation with clear-eyed detachment.

Reasoned analysis and cold logic suggest that Brocade might well be in play, for multiple reasons, but that finding a buyer willing to pay an attractive price will be difficult. In fact, for reasons I have adduced previously, one could easily contend that Brocade probably won’t be acquired in the near term.

Ittai Kidron, a market analyst with Oppenheimer and Co., has reached a similar conclusion. He has downgraded Brocade’s shares, saying he doesn’t see a buyer for the company on the immediate horizon. Kidron also has doubts about the company beating market expectations with its forthcoming quarterly results.

With no acquisition pending, and its current stock price inflated by the hot air of feverish takeover talk, Brocade would have to do particularly well in the quarter — and with forward guidance — to justify its higher market valuation.

Like Kidron, I just don’t see a buyer in Brocade’s immediate future. Situations change and markets are dynamic, but the companies mentioned as potential Brocade acquirers — HP, Oracle, Dell, Juniper, IBM — just aren’t ready, willing, or able to take the plunge at this particular juncture.