Thursday, April 30, 2009

Mr. Ellison’s Storage Dilemma’s.

For many years Larry Ellison has made little secret of his desire to drive down the cost of on-line storage. A goal not driven by any altruistic intentions but with the objective of improving the environment for Oracle based solutions. Hence his commitment and investment in Pillar Data Systems, not to ignore the possibility of actually making some money. With Oracle now heavily invested in SUN storage and Mr. Ellison heavily invested in a competitive, on-line storage company, Pillar Data Systems, Mr. Ellison would appear to be facing a dilemma surrounding his disparate interests in on-line storage.

So please forgive (hopefully enjoy) my speculative thinking, but Mr. Ellison is going to have to make some interesting decisions regarding his direct and indirect, on-line storage investments.

Possible scenarios include.

1. Oracle sells Sun storage but Mr. Ellison keeps funding Pillar Data Systems. Outcome: Potential conflict of interest lawsuits by Oracle shareholder.

2. Oracle holds onto Sun storage and Mr. Ellison keeps funding Pillar Data Systems. Outcome: Again the potential to draw conflict of interest lawsuits.

3. Oracle holds onto Sun storage and Mr. Ellison proposes that Oracle buys Pillar Data Systems. Outcome: Potential questioning/issues by the SEC and perhaps shareholders or perhaps both?

4. Oracle holds onto SUN storage but stops funding Pillar Data Systems. Outcome: Will this satisfy the SEC and the Oracle Shareholders? This would put the multiple $100M’s Mr. Ellison has investment in Pillar Data Systems at risk unless they can find another source of funding.

Whatever reality actually plays out there are interesting times ahead for the Oracle folks and increasingly challenging times for the folks at Pillar Data Systems.

Just my musings on one of the many dilemmas facing Mr. Ellison and his Oracle management team as they try to digest the SUN acquisition and deal with the reality of competing as a hardware vendor.

Being a former, and many year employee of STK, I can’t close this post without wondering what will be done with the tape business. Potential acquirers are few, very few. IBM and HP are unlikely suitors but what about EMC? I have no justification or unique insight for the statement but I would like to see them take the plunge.

My only hope is that Oracle does not allow the tape business to simply disintegrate. STK tape has a very proud history and despite the many naysayers it still has a viable future.

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