Oracle, Intel, HP Call One Another Out

Oracle Corp. (NASDAQ: ORCL) fired the first shot with this announcement on March 22nd:

After multiple conversations with Intel senior management Oracle has decided to discontinue all software development on the Intel Itanium microprocessor. Intel management made it clear that their strategic focus is on their x86 microprocessor and that Itanium was nearing the end of its life.

The CEO of Intel Corp. (NASDAQ: INTC) fired back on the company’s Chip Shot blog:

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.

Hewlett-Packard Co. (NYSE: HPQ) re-iterated its commitment to the 64-bit Itanium processor, and fired a shot of its own:

Oracle continues to show a pattern of anti-customer behavior as they move to shore up their failing Sun server business. … We are shocked that Oracle would put enterprises and governments at risk while costing them hundreds of millions of dollars in lost productivity in a shameless gambit to limit fair competition.

Oracle’s decision to stop developing software for Intel’s top-of-the-line chip follows similar decisions taken last year by both Microsoft Corp. (NASDAQ: MSFT) and Red Hat Inc. (NYSE: RHT). Intel’s claim that it has a development roadmap for Itanium is may be true, but Intel wouldn’t be the first company to change or discard a roadmap depending on market conditions.

HP is the co-developer of the Itanium processor, and the company’s response is more interesting, given the nastiness that has erupted between itself and Oracle. Last November, Oracle accused new HP CEO Leo Apotheker of dodging a subpoena seeking testimony regarding Apotheker’s role in an alleged copyright infringement when he was co-CEO of SAP AG (NYSE: SAP). Oracle also hired as co-president the fired CEO of HP.

Anyone who is surprised that Oracle is trying to pump up the hardware business it acquired last year with Sun Microsystems hasn’t been paying attention to Oracle’s behavior over the years. The company is a fierce competitor and does all it can to fully monetize everything it does.

HP’s comment about limiting fair competition seems particularly disingenuous. How is it unfair for a company to say that it is going to withdraw from the market and leave it to others? HP could perhaps welcome Oracle’s retreat – now it has the market for Itanium software all to itself.

But that’s probably not what HP wanted. What HP wants is for Oracle to spend time and money on a platform that is not adding anything to Oracle’s business, but is adding something to HP’s. Without Oracle’s software running on HP’s Itanium-based servers, HP may have a hard time selling those servers.

That’s certainly playing hardball, but unfair? Not really.

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