Companies are at odds over Itanium, other issues

After being dealt critical losses in its court crusade against Google Inc.'s (GOOG) Android, Oracle Corp. (ORCL) and its CEO Larry Ellison are collecting themselves for their next major court battle.  Back in court (Case "Hewlett-Packard Company v. Oracle Corporation" No:111CV203163), Oracle finds itself on the receiving end as Hewlett-Packard Comp. (HPQ) looks to punish it with breach-of-contract allegations regarding Oracle's decision to kill support for Itanium servers.

I. Oracle and HP Quibble About Fate of Itanium

Itanium is an alternative architecture from Intel Corp. (INTC) specialized for mission-critical systems.  While pricey and outdated in some ways, Itanium remained for many customers remained the best option, hence constituting a small, but lucrative annual revenue stream for Intel.

Intel Tukwila
Intel's latest Itanium, Tukwila launched in Feb. 2010 after years of delays.  It was originally announced in Feb. 2003 under the code-name "Tanglewood". [Image Source: Intel]

With recent statements from Intel raising the possibility of a merger of the Itanium and x86 architectures, some companies -- including Microsoft Corp. (MSFT) and Red Hat, Inc. (RHT) -- perceived that as a signal that Itanium was going the way of the dinosaur.  Both companies dropped their support, putting substantial pressure on the Itanium ecosystem.

Oracle, not looking to be left in the dust, also announced its decision to jump ship.  Unfortunately that move may have breached its contractual obligations to HP -- or so HP says.

The pair was unable to settle their differences in mediation, so the court trial will be kicking off today.  HP seeks $4B USD in damages.  Oracle's lawyers claim that HP "cannot support" its allegations of breach-of-contract.  Further, they allege that Intel and HP had a secret understanding that Itanium was headed for end-of-life.  Oracle has counter-sued over that alleged understanding, accusing HP of false advertising.

The spat is expected to draw in Intel CEO Paul Otellini to set the record straight about Itanium's fate, although Intel is not a plaintiff or defendant in the case.

Santa Clara
The court conflict is set in scenic Santa Clara, Calif. [Image Source: Treehugger]

The contract dispute between the two California-based companies (HP and Oracle) will take place in state court -- the Superior Court of the State of California, County of Santa Clara, to be specific.  Santa Clara is located at the heart of Silicon Valley in northern California (in the Bay Area) and is home to Intel's headquarters.

II. Judge Likens Case to "Divorce" Proceeding

The first phase of the trial, presided over by Judge James Kleinberg, will constitute the Judge seeking to verify whether a contract still exists between the two companies.

The spat between the software and hardware giant is particularly acrimonious.  Its roots might trace to Oracle's acquisition of Sun and HP's recent business software purchases, both of which put the companies out of their traditional realm and into direct competition with the others' products.  Further hurt feelings stem from Oracle CEO Larry Ellison's decision to appoint dear friend and former HP CEO Mark Hurd as a co-President after HP fired him.  

Mark Hurd
Mark Hurd ex-HP CEO is now an Oracle co-President and Oracle CEO Larry Ellison's right-hand man. [Image Source: Justin Sullivan/Getty Images]

While HP had no interest in keeping Mr. Hurd after he lied to board members about an affair, they were quite upset with him for jumping to the frenemy, calling the decision "anti-consumer".  HP tried to stifle the appointment, but Mr. Hurd was eventually allowed to work at Oracle.

Judge Kleinberg acknowledge the bitter nature of the spat commenting, "This case appears to be the end of a marriage."

The case is an important one for Oracle, who in the wake of the Android defeats will likely look to save face with this major dispute.  Another loss could be perceived as a sign of weakness from investors -- something Oracle desperately wants to avoid.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007

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