Oracle May Make Move into Storage Software

Oracle may be weighing a move into storage software, perhaps through acquisition, according to Wall Street analysts.

Oracle may accomplish this through acquisition of Legato, USB Piper Jaffray analysts Michael Marzolf and Jennifer Swanson wrote in a Feb. 11 research note. An Oracle spokesperson declined to comment on the report.

"The emphasis of this note is on Oracle's likely move down the software stack into storage," Marzolf and Swanson wrote. "We believe that in time, Oracle plans to offer the full spectrum of business continuance around data, including: High availability database, High Availability Storage, Replication, Remote Replication, Tape/Disk Backup, and Vaulting."

The analysts said that Oracle's move into storage could be a selling point against database competitors IBM and Microsoft, and could threaten Veritas.

Acquisition Target: Legato?

"While some have speculated that the target in the storage arena for Oracle is Veritas, we believe this is highly unlikely," the Piper Jaffray analysts said. "We believe that it is more likely that Oracle pursues deeper ties to Legato, who happens to be for sale."

Legato is a more attractive acquisition target because it has one-tenth the market cap of Veritas, they said, and its technology is viewed as "just as good" by many within Oracle. Legato is currently the only third-party software that ships with the Oracle server, said Marzolf and Swanson, who noted that Oracle "has a strong distaste" for Veritas.

If Oracle were to acquire or otherwise boost its partnership with Legato, it could "further strain the already rocky VOS (Veritas-Oracle-Sun) relationship," and "make Legato a much more credible competitive threat," Marzolf and Swanson wrote.

"We also believe that as a combined offering, once provided the extra deep keys into the Oracle database, Legato's tape backup solution shipping with every 9i server will be a very compelling business continuance story to customers who may have chosen Veritas in the past, dampening already slow growth rates for Veritas that closely mimic the backup market," the report said.

"For the end-user, we believe that a move by Oracle into storage would enable the management of data that has been replicated or backed up, potentially down to the record- or row-level versus backup at a table space-level with most backup software solutions currently," said Marzolf and Swanson. "This shift would make data recovery quicker, easier, and less disruptive -- features that are proving to be competitive selling points."

Other possible acquisition targets for Oracle include BakBone, CommVault, Polyserve and Sistina, they said.

Analyst: Not Sure If Oracle Move Would Be Successful

Industry analysts say a move by Oracle into storage software is possible, but they're not sure if it would be successful.

"It might make sense, although I see some potential problems there," said Michael Karp, senior analyst at Enterprise Management Associates. "A lot of industry providers already offer software tuned for use with Oracle, so it is not necessarily clear what the advantage to IT buyers might be."

"There is much more to storage management than backup and recovery, and much more to backup and recovery than simply tending to databases," Karp said. "Legato certainly understands this, but there is no historical evidence that Oracle appreciates the situation. It remains to be seen if there is any compelling reason for IT managers to go with a database company to provide a generalized storage management solution."

Analyst: Skeptical of Oracle Acquiring Legato

Another analyst, Nancy Marrone of Enterprise Storage Group, was skeptical of the Piper Jaffray report itself.

"As for Oracle buying Legato, I think that would be a real long shot," Marrone said. "Why would they? If they felt that they wanted to move into that space, they have the resources to buy the number one vendor, and they have a tie with Veritas. I'm not saying that Oracle is buying Veritas by any means -- it's just I don't see the reasoning to buy Legato.

"I can see other companies buying Legato," she said. "There are plenty of possibilities. Microsoft would be a good candidate to buy them, as there are a lot of complimentary solutions -- the OTG products for Exchange, for example, and the Xtender products -- but the bottom line is it is all speculation. I just don't put a lot of credence in the Oracle story."


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