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@section_heading: Focus on IntelFocusIntel-A.doc @heading: Sit Back and Watch The Fireworks @deck: The next competitive battleground will be integrated hardware and software solutions.

By Ed Sperling @text: Intel’s acquisition of Wind River and Oracle’s acquisition of Sun are based on the same tectonic shift about where the value—or at least the perceived value—will be in the future.

The fact that Oracle and Intel could well become competitors speaks to some of this change. Oracle will be able to couple its enterprise applications much more tightly with the hardware, a tack it has taken in the past with a database it has bundled with HP hardware. By streamlining some of the general operating system or middleware that links an application to the hardware and running certain functions much more directly to the processor, speed can be increased enormously and the energy used to do that can be slashed.

Intel, meanwhile, can balance the hardware with a real-time operating system to build in better performance for certain functions—again outside the general operating system or middleware layer—while also reducing the energy it takes to perform those functions. Some cores on its chip may only have to perform certain functions occasionally, allowing them to remain in a sleep or deep sleep state, while others may be used much more intensively.

For both companies, having access to the other half of the design or programming equation, is an enormous competitive benefit over traditional competitors. The value in software will no longer just be measured by what it can do, but how well it is integrated with the hardware. And the value in hardware will be how well it can be customized to run the software.

Intel’s immediate competition will be in processor world, where it has been trying to significantly cut the power consumption of its Atom chip to gain a toehold in the embedded market, as well as slice off any advantage that AMD might ever have in performance or power savings in the traditional computing market. That gives Intel some leverage to cut prices, boost performance and make programming much easier in the Atom world, while it leave AMD with a single weapon: price.

Oracle’s approach is much the same. If it can make its applications run far more efficiently and more quickly than its competition in the enterprise, then it sells a packaged solution that’s hard to combat with a separate hardware platform running an Oracle database or enterprise application such as Oracle Financials.

But Oracle also could well push down into the small and midsize business arena with this strategy, while Intel could push upward into the same market with its own servers running tightly couple applications. And at that point, we could witness a whole new set of fireworks between two of the most aggressive companies the tech world has ever seen.

(Please run standard Edward Sperling bio and headshot).