For some context-setting, before getting into the implications of Oracle's somewhat surprising entry into the hardware business today, it's useful to consider some ways in which Microsoft and Oracle have a lot in common.
1. Both companies appear to be relatively staid, when compared with edgier companies such as Apple and Google. Indeed, in many respects, in terms of the current market conventional wisdom, it often seems that Apple and Google can do nothing wrong, while Microsoft and Oracle can do few things right. Sure, Microsoft and Oracle are the largest pure-play independent software vendors in the world, and they're astounding profitable, but let's face it: they are usually portrayed as pretty boring big companies, in the mainstream press, and the press also seems to prefer to accentuate the negative where both vendors are concerned, e.g., problematic patches, threats from open source alternatives, senior executive departures, etc.
2. Microsoft and Oracle are both long-term-focused, with compelling -- and in many ways very similar -- visions about how information management can be productively transformed through the use of commodity-scale, end-to-end product portfolios, ranging from server operating systems to user environments for mobile devices. While again perhaps not as exhilarating or headline-worthy as the next cool web service from Google or iPhone from Apple, software from Microsoft and Oracle is driving a huge (and growing) percentage of global information systems today.
3. Microsoft and Oracle are at the center of expansive (and in many ways overlapping) hardware, software, and service provider ecosystems. While the press and blogosphere may sometimes leave people with the impression that traditional software vendors are obsolete, in favor of open source and smaller/focused alternatives (and now cloud/software-as-a-service stuff, of course), in reality Microsoft and Oracle both continue to be very strong market leaders, in terms of price/performance cost-effectiveness as well as feature/function innovation, especially when the pools of price-competitive developers and system administrators trained in their products are factored into the economic equations.
4. Microsoft and Oracle tend to formulate and stick to long-term plans. Microsoft is fundamentally a platform and tools vendor, with .NET at the center of its strategy, and Oracle -- as its name has always suggested -- is fundamentally about information management. Both have placed strategic bets on scale-out architectures for infrastructure, database management, application servers, and middleware. Indeed, with the exception of some important differences, such as the fact that the Microsoft Windows Server System is available exclusively on Windows Server, and Microsoft is focused on .NET, while Oracle supports multiple server operating systems and prefers the virtual machine architecture and application framework of the Java community to .NET, their architectures have a great deal in common. They also play well together, despite very aggressive marketing and sales organizations, because almost all large organizations use a mix of Microsoft and Oracle products (i.e., because their joint customers demand it).
5. Many people seriously underestimate the scope and momentum of the businesses of Microsoft and Oracle, in part because it sometimes takes several years and product releases before the vendors bring their visions to fruition. Oracle is an operating system vendor, for example, with its Enterprise Linux product, but you don't often read about that in the industry press. And Microsoft is actually a very strong global competitor in domains such as mobile device operating systems and game consoles, but the press usually presents Microsoft as a loser if it's not in first or second place in any market in which it seeks to compete. Both vendors keep pounding away at bringing their long-term visions to reality, in any case, and often, as two of the most resourceful players, also avail themselves of opportunities to advance their agendas through acquisitions.
Overall, cool/hip or not, Microsoft and Oracle are both now exceptionally well-positioned to benefit from the disruptive changes percolating through the information technology landscape, including massively multicore computing clusters, radical changes in storage capacity and price/performance, and incredibly advanced networking technologies. Oracle made a very interesting leapfrog move today, with its Exadata storage server and Oracle Database Machine, but it's now playing a game in which, in many respects, it has only one kindred spirit competitor -- Microsoft -- and we can assume it won't be long before Microsoft (along with its partner ecosystem) unveils its response to today's Oracle news.