As Oracle Goes Aggro On EMC And VMware, VMware Cozies Up To Oracle's Rival SAP

Oracle on Wednesday announced what it calls the "Datacenter of the Future." And by that it means a bunch of new hardware and software that takes on giants EMC, Cisco, and VMware.

Specifically, Oracle announced three new products:

• Oracle's new Virtual Compute Appliance X5, which competes with the Cisco/EMC/VMware partnership product known as Cisco Unified Compute System
• Oracle FS1 Series Flash Storage System, which goes head-to-head with EMC, and...
• The sixth generation of its Oracle Exadata Database Machine X5, a special server designed to host Oracle's flagship database software.

These systems include, at no extra cost, Oracle's competitor to VMware, called Oracle VM.

In his classic trash-talking style, Oracle CTO and founder Larry Ellison specifically slammed EMC (VMware's parent company) during the presentation, claiming, "Our list price is less than half of their discount prices." Then he laughed and made it clear. "We will negotiate and will discount prices" even more.

In other words, Oracle intends to start an old fashioned price war with EMC.

Interestingly, the launch of these news products comes shortly after we heard some interesting news about VMware. The company is upgrading its financial software from Oracle to a new vendor: SAP.

JMP Securities analyst Pat Walravens says that VMware is yanking out Oracle's enterprise resource planning software and installing SAP's ERP software instead.

"Our due diligence suggests that VMware (VMW, MO, $119 PT) is planning on migrating from Oracle (ORCL, MP) ERP to SAP ERP as part of a multi-year business transformation program," he writes in a research note.

Companies don't switch their financial software vendors willy nilly. It's a big involved decision and it takes months and a lot of effort to switch.

The upgrade has been going on for months, sources close to VMware tell us. But they also say it was not done for vengeance in retaliation to Oracle's increasingly aggressive competition with VMware and parent EMC.

In fact, it appears to be part of a makeover that VMware is doing for its own internal IT system and processes for billing its customers.

Still, knowing how heatedly Oracle and SAP compete - the two are always taking public pot shots at each other - we feel certain that SAP enjoys a customer win just a little bit more when it steals that customer from Oracle.