Friday, September 10, 2010

Oracle Clash May Force HP to Partner with SAP and Look for Acquisitions Aggressively. Who Might HP Buy?

Hewlett-Packard is expected to assess its data center partnership with Oracle as relations between the two companies sour due to emotional reactions from both sides over ex-HP chief Mark Hurd.

Oracle CEO Larry Ellison yesterday issued a terse response to HP’s filing a lawsuit against its former CEO Mark Hurd, stating HP’s legal attack was putting the partnership at risk. HP is alleging that Hurd will inevitably disclose trade secrets to his new employer.

In addition to seeking new partners, HP could strengthen its data center offering with buys to hedge its bets in case of a further break-down in its relationship with Oracle. Companies that would bolster HP’s database offering and help it compete with Oracle include business intelligence companies MicroStrategy and SAS Institute, data integration specialist Informatica or data warehousing company Netezza. We tend to think that similar to 3Par acquisition, HP may get aggressive to quickly ramp up it's database stack in lieu of Oracle.

Netezza shares jumped about 5% in trading since yesterday morning on takeover rumors and reports that the Marlborough, Massachusetts-based company canceled a planned dinner with investors. Netezza did not respond to a request for comment.

Palo Alto, California-based HP and Oracle have been moving apart since Oracle acquired hardware vendor and HP rival Sun Microsystems in April 2009. Oracle is seen as beefing up its offering to match that of HP in the data center space, but HP is still without a strong product to match Oracle on the database side.

SAP, which bought database management company Sybase earlier this year, would be the most logical partner for HP. The German software giant would likely welcome closer ties to help compete against Oracle. The two could replicate “Acadia”, a joint sales venture between EMC, VMware, and Cisco built around their data center products.

The latest conflict between HP and Oracle is an opportunity for SAP to build closer ties with HP. SAP would clearly benefit from such partnership having aligned itself with one of the 800-lb gorillas of the IT. The future of standalone SAP frequently comes up as analysts speculate a likely takeover by Microsoft or IBM may be compelling to SAP shareholders. Microsoft also could see Hurd’s move to Oracle as a chance to bring Microsoft and Oracle closer together, the executive said.

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