HP Wins Oracle Lawsuit

As many are familiar, HP and Oracle were formerly close collaborators and strong supporters of Intel’s Itanium architecture. However, in recent years, the relationship has turned acrimonious with Oracle withdrawing support for all software on Itanium. This move was widely seen as a ploy by Oracle to sabotage HP’s Itanium servers, which compete directly with Oracle (nee Sun) hardware. In a twist, there was also a personal aspect to this move, reflecting the tensions between Larry Ellison, Mark Hurd, Leo Apotheker and HP’s board.

Nonetheless, HP was in a considerable bind since the company has a far smaller software portfolio than either Oracle or IBM. For instance, Oracle and IBM respectively have databases that are popular on high-end servers, whereas HP has always worked with third parties. HP simply could not replace many of the software packages that Oracle owned, such as Peoplesoft and other middleware applications, leaving the company with an incomplete platform and customers with a serious problem.

HP countered with a lawsuit, alleging that Oracle’s actions violated various development and support agreements and cost the company significantly. Estimates of the financial impact vary, but some sources claim that HP could lose $4 billion in high-margin revenue over roughly eight years.

Injunctive Relief for HP

A rumor has reached our ears that HP has won the case against Oracle. The judge in HP’s case has issued an injunction against Oracle. Specifically, any Oracle software that was previously supported on Itanium (along with any updates) must be re-instated on the Itanium platform. Presumably this covers all four major operating systems: HP-UX, Linux, OpenVMS and the Non-Stop Kernel. Oracle is also required to continue supporting and developing software for Itanium as long as HP continues to sell Itanium servers. Itanium is primarily used in mission-critical servers, which have an incredibly long life time. For example, HP’s PA-RISC systems were sold up until 2009, roughly a decade after being superseded by Itanium.

According to the rumors, the judge has not determined any monetary damages against Oracle. That process is somewhat more involved, because it requires expert opinions on the financial harm caused to HP. However, it is likely that the damages will be in the billions.

It is also unknown what enforcement mechanisms will be in place to ensure that Oracle ultimately complies with the injunction. One challenge with judicial solutions is that it is quite feasible to follow the letter of the law, while wholly violating the spirit. It is possible that Oracle might re-instate support, while doing the utmost to harm the platform by delaying bug fixes, patches and updates. Given Oracle’s conduct, it is highly likely that some form of long term enforcement will be a component of the ultimate verdict to ensure compliance.

Good News for Nearly Everyone

This outcome is a huge win for the beleaguered HP, but has industry-wide implications. For many of these mission-critical deployments, a migration can take years of careful planning and testing. HP now has a considerably longer time frame and more choices regarding the Itanium platform. Without Oracle’s software, it was very difficult to see a viable trajectory and it was nearly certain that HP would have to abandon Itanium.

With the injunction, HP has the option of sustaining the Itanium platform for a long time to come. Intel is on the verge of launching Poulson, the next generation Itanium processor. The 32nm Poulson and derivative designs were explicitly designed to sustain the Itanium platform for another decade. Given HP’s history of long support for mission-critical servers, it is likely that Itanium servers will continue to be sold for at least the next 20 years and perhaps longer. So both HP and customers have a long time to consider the next moves.

For Itanium customers, this is welcome news. In essence, the court has rebuffed Oracle’s attempt to force customers to move off the Itanium platform. Customers deserve better than a sudden forced migration off a hardware platform, due to the intransigence of a software vendor. While some customers might wish to have a migration plan, it appears that they will have a relatively long time horizon to consider their options, perhaps around 5-15 years depending on the details of the injunction. Unfortunately for Oracle, the ill will generated by this move means that Oracle is unlikely to be a top contender for any potential migration plans.

However, the ruling is good news for all customers and Oracle competitors, not just HP’s ecosystem. If Oracle were to succeed in essentially killing off the Itanium platform by withholding software support, the implication is that other platforms might be vulnerable as well. For example, IBM has a considerable enterprise software portfolio, but most IBM customers still rely on Oracle to a certain extent. Unlike HP, IBM could eventually fill the void left by Oracle, but it would be an unpleasant and expensive endeavor for everyone. Less vertically integrated vendors would be at much higher risk and seen as vulnerable to similar behavior. The injunction makes it clear that Oracle will not be able to undo contractual obligations, which should give customers and competitors far more confidence in the future of non-Oracle platforms.

Ultimately, the injunction seems to be a boon for HP and the industry at large. The only real loser is Oracle, which has both lost the case and will probably have to pay damages. Beyond the immediate consequences though, Oracle’s actions will make current and potential partners and customers think twice and more carefully consider the reliability of different vendors.

Updated: On 8/1/2012, the article was updated to reflect that the judge’s order required Oracle to continue supporting Itanium as long as HP continues to sell Itanium systems.
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