Itanium is headed towards its death bed, and HP is suing Oracle for dropping software support, which it claims breaches contract.  (Source: Itanium)

Oracle and HP became bitter rivals after Oracle acquired Sun Microsystems, putting it in a competitive position with its former partner.  (Source: Justin Sullivan/Getty Images North America)
There's no love lost between these two former friends

The heads of the world's largest PC maker, Hewlett-Packard, Comp. (HPQ), and the world's third largest software maker, Oracle Corp. (ORCL), used to sit across from each other in the meeting room planning joint strategies.  Now they're going to be meeting at a new location -- the federal court house.

In a sign of the growing rift between the firms, HP filed suit against Oracle in California (Case "Hewlett-Packard Company v. Oracle Corporation" No:111CV203163) over the software maker's decision to drop support for Intel Corp.'s (INTC) low-volume Itanium processors.

I. HP and Oracle -- Friends Become Enemies

The clash between HP and Oracle traces back to Oracle's 2010 acquisition of Sun Microsystems, which thrust it into a position as a server maker.  Previously, the pair had been dedicated partners for almost 30 years and shared over 140,000 customers.

After the Sun purchase, tensions elevated when Oracle CEO Larry Ellison gave a position to disgraced former HP CEO Mark Hurd.  HP sued Oracle claiming Mr. Hurd had trade secrets and would be in breach of contract.  It eventually settled the case.

Soon after this incident, HP hired Léo Apotheker.  Mr. Apotheker was no friend of Oracle's -- Oracle claims that while he was with German IT business firm SAP AG that he executed a plot to steal Oracle's intellectual property.

With a bitter divide between the companies' leadership and a new competitive position, it's little surprise that the rivalry would come to legal blows.

In a statement HP chief spokesman Bill Wohl states, "The silence from Oracle is deafening. We are very disappointed it has to come to this."

In the suit HP alleges that Oracle violated a contract promising to support Itanium to the bitter end.  The company's lawyers write, "In a mere eight months, Oracle has gone from arm-in-arm partnership with Hewlett-Packard to bitter antagonist."

II. Oracle Fires Back

In a press release, Oracle spokeswoman Deborah Hellinger fires back with an equally stinging rebuke.  She says that Oracle has quite a different recollection with regards to what it signed.

She writes:

It just takes a few minutes to read the early drafts of the agreement to prove that HP’s claim is not true. What is true is that HP explicitly asked Oracle to guarantee continued support for Itanium; but Oracle refused, and HP’s Itanium support guarantee wording was deleted from the final signed agreement.

Here's where it gets interesting -- HP claims the signed document says Oracle does have to support Itanium till its end of life.  Oracle claims its version of the signed document says it doesn't.

III. Itanium: Bye, Bye, Bye

The other thing Oracle and HP's documents reveal is something that IT people could have seen coming -- Itanium is reportedly set to be discontinued by Intel.  This comes hardly as a surprise -- Itanium sales fell abysmally below Intel's projections.

While the chips delivered some promising features, overall performance was poor.  As a result, Itanium was outsold by Sun Microsystems' (now owned by Oracle) SPARC chips and International Business Machines' (IBM) POWER architecture chips.

At the end of the day Itanium still posted a small, but tidy profit for Intel. However, the problem was that the small volume led to software providers ditching the platform.  Among those to quit it included OS makers Microsoft Corp. (MSFT) and Red Hat, Inc. (RHT).  Without software, the hardware became and increasingly tough sell.

As of March of this year, Intel's chief executive Paul Otellini remarked, "Intel's work on Intel Itanium processors and platforms continues unabated with multiple generations of chips currently in development and on schedule. We remain firmly committed to delivering a competitive, multi-generational roadmap for HP-UX and other operating system customers that run the Itanium architecture."

Now that the public knows that the platform is head for end-of-life and has little software support, it's questionable whether any major business would order the chips.  The only remaining question is when the platform will die.

Oracle claims that when HP approached it in September 2010 asking to commit to Itanium till end-of-life, that it already new about Intel's decision to phase the processor out.  It says that it didn't hear about that decision until March 2011 when it was informed by Intel.

The company accuses:

What we know for certain is that Ray Lane and HP’s current board members and Leo Apotheker and HP’s current management team now know full well that Intel has plans in place to end-of-life of the Itanium microprocessor. Knowing this, HP issued numerous public statements in an attempt to mislead and deceive their customers and shareholders into believing that these plans to end-of-life Itanium do not exist. But they do. Intel’s plans to end-of-life Itanium will be revealed in court now that HP has filed this utterly malicious and meritless lawsuit against Oracle.

So which is it? Did HP deceive its former partner trying to trick it into signing a document that it knew would be disadvantageous?  Or was HP merely trying to solidify cooperation between the two firms?  The courts will be the judge of that.      

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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