Q+A-What are Larry Ellison's plans for Sun Micro?

 * Oracle CEO says committed to Sun's hardware business
 * Oracle to boost investment in SPARC microchips
 BOSTON, May 7 (Reuters) - Oracle Corp ORCL.O Chief
Executive Larry Ellison shook up Silicon Valley last month when
he made a surprise move to enter the hardware market by
acquiring computer maker Sun Microsystems Inc JAVA.O.
 Some analysts speculated that Oracle, the world's largest
database software maker, actually wants Sun's software assets
and that it might eventually sell off the hardware business.
 Below are Ellison's comments on his rationale for buying
Sun and strategy for turning around the struggling company.
Ellison supplied his answers to Reuters questions via email.
 Q. Why does Oracle, a company that prides itself on high
margins, want to get into the low-margin hardware business? Are
you going to exit the hardware business?
 A. No, we are definitely not going to exit the hardware
business. While most hardware businesses are low-margin,
companies like Apple and Cisco enjoy very high-margins because
they do a good job of designing their hardware and software to
work together. If a company designs both hardware and software,
it can build much better systems than if they only design the
software. That's why Apple's iPhone is so much better than
Microsoft phones.
 Q. Apple and Cisco have shown they can make hardware and
software work together. What experience does Oracle have
designing hardware and software to work together?
 A. Oracle started designing hardware and software to work
together a few years ago when we began our Exadata database
machine development project. Some of our competitors, Teradata
and Netezza for example, were delivering pre-configured
hardware/software systems, while we were just delivering
software. The combination of hardware and software has
significant performance advantages for data warehousing
applications. We had to respond with our own hardware/software
combination, the Exadata database machine. Oracle's Exadata
database machine runs data warehousing applications much faster
-- at least ten-times faster than Oracle software running on
conventional hardware. All the hardware and software pieces,
database to disk, are included. You just plug it in and go -- no
systems integration required.
 Q. Oracle's done integrated hardware and software design
with the Exadata database machine. But Exadata uses standard
Intel chips. Are you going to discontinue Sun's SPARC chip?
 A. No. Once we own Sun we're going to increase the
investment in SPARC. We think designing our own chips is very,
very important. Even Apple is designing its own chips these
days. Right now, SPARC chips do some things better than Intel
chips and vice-versa. For example, SPARC is much more energy
efficient than Intel while delivering the same performance on a
per socket basis. This is not just a green issue, it's an
economic issue. Today, database centers are paying as much for
electricity to run their computers as they pay to buy their
computers. SPARC machines are much less expensive to run than
Intel machines.
Q. Is your plan to use SPARC to compete by lowering a data
center's electricity bills?
A. No. Our primary reason for designing our own chips is to
build computers with the very best performance, reliability and
security available in the market. Some system features work
much better if they are implemented in silicon rather than
software. Once we own Sun, we'll be able to plan and synchronize
new features from silicon to software, just like IBM and the
other big system suppliers. We want to work with Fujitsu to
design advanced features into the SPARC microprocessor aimed at
improving Oracle database performance. In my opinion, this will
enable SPARC Solaris open-system mainframes and servers to
challenge IBM's dominance in the data center. Sun was very
successful for a very long time selling computer systems based
on the SPARC chip and the Solaris operating system. Now, with
the added power of integrated Oracle software, we think they can
be again.
 Q. Your management team has no experience with delivering
hardware. There is a lot of risk in going into an unfamiliar
 A. Obviously, we want to hold on to Sun's experienced team
of first-rate hardware engineers. For years, Sun has led the
industry in building and delivering innovative systems. For
example, Sun was the first company to deliver systems built on
a multi-core processor -- what Sun called the Niagara chip --
and the industry followed. Oracle has a good track record of
retaining the engineering talent from acquired companies; Sun
will be no different. In addition, over the last couple of
years Oracle gained a lot of experience developing and
delivering our first integrated hardware and software system,
the Exadata database machine. We have lots of hardware
experience inside of Oracle. Hundreds of Oracle's engineers
came from systems companies like IBM and HP. Even I started my
Silicon Valley career working for a hardware company that
worked with Fujitsu to design and build the first IBM
compatible mainframe.
 Q. There has been a lot of speculation in the press that
Oracle is going to sell some or all of Sun's hardware
businesses. From your previous answers it certainly seems like
you are keeping SPARC Solaris systems business. Are you keeping
the disk storage and tape backup businesses?
 A. Yes, definitely. We believe the best user experience is
when all the pieces in the system are engineered to work
together. Disk storage and tape backup are critical components
in high-performance, high-reliability, high-security database
systems. So, we plan to design and deliver those pieces too.
Clearly many Sun customers choose disk and tape systems from
other vendors. That's what open systems are all about: providing
customers with a choice. But Oracle expects to continue
competing in both the disk and tape storage businesses after we
buy Sun.
 Q. Is Exadata moving to Sun SPARC Solaris?
 A. Exadata is built by HP using Intel microprocessors. We
have no plans for a SPARC Solaris version of Exadata. We have
an excellent relationship with HP that we expect to continue.
The Exadata database machine delivers record-setting database
performance at a lower cost than conventional hardware.
 Customers love the machine. It is the most successful
product introduction in Oracle's 30-year history. The Sun
acquisition doesn't reduce our commitment to Exadata at all.
 (Reporting by Jim Finkle, editing by Tiffany Wu and Matthew