SunMicrosystemsCase Facts:Oracle, a California-based business software company, was one of the world’slargest and most reputable sellers of database management systems and other relatedsoftware. With $23.6 billion in annual revenue, the company was a leviathan, led for- wardwith lightning speed by the only CEO Oracle had ever had, Larry Ellison. Sun wasnothing to scoff at either. Once the darling of Silicon Valley, it had fallen ontough times but was still competitive. Sun had started as a hardware and servers producer, but over the years, it hadestablished a solid position in the software industry with its Java programminglanguage, Solaris operating system, and MySQL database management software. Combining these two companies had the potential to create the Wal-Mart of theenterprise software industry. Ellison “had a vision for creating an end-to-end vendorclients go to for all their technology” needs.Oracle had been on a successful shopping spree over the past several years. The ability toacquire 10% margin companies and turn them into 40% margin companies haddistinguished Ellison and his team as ruthless cost-cutters who planned ahead wellbefore making purchases. As a member of the corporate development team, Madison knew that better thananyone else. She had spent the last few weeks carefully poring over every part ofSun’s financials, business lines, R&D figures, and personnel expenditures. Today was a break from the 20-hour work days, the sight of empty Chinese foodcartons, documents strewn across the table, and weary-eyed bankers. Today had beena better day, but only delivered brief respite to the team.CompetitiveLandscape:The computer hardware market consisted of personal computers (PCs) (roughly half ofsales), servers, mainframes, and workstations (Although customer loyalty was relativelylow, brand awareness was high, which somewhat restricted new entry into the market.Business customers were typically tied to specific hardware manufacturers through long-term contracts, which led to significant switching costs. Individuals were less fetteredand had minimal switching costs, but only represented a small percentage of the market.Computer hardware was a necessity for individuals and businesses alike, making demandstrong and consistent. With weak rivalry among players, the market had enjoyed ahealthy 4.8% growth over the previous few years and was expected to grow at thesame pace until 2013.