If Oracle owns the Java trademark and controls the Java Community Process, it could strategically secure Java and gain control over its future direction. But the Java community's reaction to its ownership is critical.
News Analysis
On 20 April 2009, Sun Microsystems and Oracle announced that they have entered into an agreement under which Oracle will acquire Sun in a deal valued at approximately $7.4 billion, or $9.50 per share. Oracle says it expects the transaction to close by Summer 2009, subject to shareholder and regulatory approval.
Analysis
Java is among the most valuable assets at stake in Oracle's proposed acquisition of Sun. Gartner believes that control of Java was one of the main drivers behind the deal.
The term "Java" encompasses several elements. The core Java technology is almost entirely composed of open-source code, but Sun retains control of the Java trademark and plays an influential role in coordinating the Java Community Process (JCP) — the open process by which Java standards are proposed and evolve. Oracle is one of the main suppliers of Java-based application infrastructure middleware. Oracle CEO Larry Ellison has said his company's Java-based Oracle Fusion Middleware is the fastest-growing part of its business. Java software embedded into consumer devices, such as PDAs, mobile phones, set-top boxes, media players and other electronic gadgets, represents the most directly profitable part of Sun's Java portfolio, giving Oracle entry into a new, lucrative market. (As an example, approximately 80% of the 960 million mobile devices shipped in 2008 embed the Java Platform, Micro Edition.) Nevertheless, Gartner believes Oracle's interest in controlling Java is primarily motivated by defensive reasons, to prevent Java from falling into the hands of competitors (such as IBM) or of companies that are mainly focused on Sun's hardware business and have little interest in Java technology. If Oracle owns the Java trademark and controls the JCP, it will be able to strategically secure Java and gain control over its future direction.
But ownership of Java will require some diplomacy on Oracle's part. If Oracle makes over Java into a proprietary technology or dramatically increases the cost of Java licenses, it risks limiting Java's popularity and profitability. IBM, SAP and Nokia have never perceived Sun as a threat to their business in the enterprise software and mobile markets comparable to the threat potentially represented by Oracle.
Oracle has been a "good citizen" in the Java community so far, but if IBM, SAP, Nokia and other important Java industry participants believed that Oracle had "hijacked" Java, they would strive to reduce their dependency on a technology controlled by a major competitor. Heavily invested in Java, these companies could not afford to suddenly drop their support for it due to the large number of their customers using Java-based products and the lack of readily available alternatives. Instead, vendors may be tempted to develop their own Java-compatible technologies. (The open-source core Java technology makes this technically possible.) Such disparate development efforts would fragment the Java language into two or more Java dialects or subdialects. (For example, the market could break down into the "true" Oracle Java, IBM's derivative, an SAP variant and possibly "open source" variants.) Such fragmentation would be catastrophic for Java as well as for Oracle, dramatically devaluating its acquisition.
Oracle is likely to take aggressive steps to reassure the industry that it will maintain and possibly reinforce the open nature of the JCP and Java. The IT industry values Java for its vendor-neutral and open qualities. For 15 years, users and independent software vendors have invested in Java and facilitated its adoption due largely to the portability of Java applications across hardware platforms, operating systems, database management systems and other systems. Should Java technology fragment, or should Oracle be perceived as "locking in" Java to a proprietary technology, the IT industry is likely to lose its enthusiasm for Java and seek alternatives — with Microsoft as the most obvious option.
Recommendations
Java users: No immediate action is required. Gartner believes Java technology will remain viable through 2014 and that strategic investments based on it remain safe. Over time, however, monitor Oracle’s plans for Java and discuss with your Java technology providers what your strategic option would be, if Oracle were to overcontrol the JCP.
Non-Java users: Though the balance of power remains unchanged for now, until Oracle shares its post-acquisition plans for Java, consider evaluating potential alternatives to Java, such as Microsoft’s .NET or Dynamic Languages (such as Python, PHP and Ruby on Rails) when practical.
Java technology providers: Establish a dialogue with Oracle to ensure that the company understands your requirements for the management of the JCP, technology licensing and other Java-related matters.
Recommended Reading
“Oracle/Sun Deal Will Change Competitive Landscape in IT” — If completed, the acquisition of Sun could make Oracle a powerhouse vendor in both hardware and software, rivaling IBM and HP. By Kenneth Chin, George Weiss, Donald Feinberg and Massimo Pezzini
"Java EE Is Not the Next CORBA” — Some industry watchers predicted the decline of Java after the release of Java EE in 2006 because of the platform's growing complexity, but Gartner disagreed and stated its viability was rock solid. By Massimo Pezzini
(You may need to sign in or be a Gartner client to access the documents referenced in this First Take.)
Source: Gartner Institute
