When Oracle acquired Sun last year, it did so for things like the Java platform and the Solaris operating system, not servers running on Intel's x86 architecture. In fact, even though Sun thought it could become a major seller of x86 servers prior to the buyout, Oracle CEO Larry Ellison now says that the company makes next to no money on them and plans to start phasing x86-based servers out entirely in 2012 favor of more profitable Solaris/SPARC-based hardware.
"I do not care if our commodity x86 business goes to zero. We do not make any money selling those things,” Xbit Labs reports Ellision as saying in a conference call with several financial analysts. “We have no interest in selling other people's intellectual property; commodity x86 includes Intel (intellectual property) and Microsoft IP. We do not make money selling that stuff, and we are phasing out that business. We have interest in selling systems that include our IP.”
Ellison told analysts that not only does Oracle fail to make any money on x86-based servers, the company’s salespeople don’t make any money on them either. That’s because the salespeople earn commission based on profit margins and x86 servers frankly don’t have much of a profit margin for Oracle. Ellison says that sales of servers based on the company’s proprietary designs are expected to skyrocket and make Oracle’s margins much more palatable for investors, and hopefully eventually even return to the lofty margins the company was raking in prior to acquiring Sun.