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
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
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
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.
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
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
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.
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.