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Mr Ellison helps himself

economist.com

34 pointstimothychung11 comments

With my low karma count, I hesitate to ask this - but what benefit is there to being the "Apple" of enterprise software? The benefits of Apple to the consumer market is that you don't have to know much about the insiders of the device in order to use it. Is that really a benefit to a mega corporation(like a bank or an insurance company), where the "insides" of the software are going to be manipulating the most valuable part of their business?

Unless Oracle is going to be targeting very small companies, I can't see how they get past that.

Many companies have a big expensive oracle-dependant app running, and would rather not have to bother too much. Today they have to get machines from one vendor, OS'es from another, storage from a third, networking from (you get the picture...) - or, get it all from an expensive third party consultant.

With this setup, Oracle can send a salesman with a spreadsheet to those companies and plot in how much computing power is needed and how much storage is needed, and have it spit out an integrated, supportable solution, build completely from Sun/Oracle components. When they run out of capacity, one way or the other, it's more-or-less instantly pluggable.

Oracle is no longer a software application, it's an appliance.

Larry Ellison, 2005 interview with SF Chronicle

"Q: Does that lead to a consolidation period?

A: The industry is maturing. It is going to consolidate. That's exactly what happened to every other industry. I didn't invent the idea of consolidation. What happens during a period of consolidation is (the company in) second place can suddenly move and become the winner.

One of the interesting things is (that) when you look at when the automobile industry, the clear winner in the early phase of the automobile industry was Henry Ford. Ford was the No. 1 car company in the world by far. Then a guy by the name of Alfred Sloan decided to get all of the good losers together -- Chevrolet and Buick and all those guys -- and built General Motors. Then General Motors passed Ford during the consolidation phase in the automobile industry.

So during the entrepreneurial growth phase, Ford won. During the consolidation phase, Ford lost and found itself in second place.

Q: So you don't want to be Henry Ford.

A: It's too late for anyone to be Henry Ford. That phase is over. We did pretty well in the database business. We have the No. 1 database in the world, and I'll argue that, at the dawn of the information age, that's not a bad position to have."

The entire interview is interesting for Larry Ellison predicting the future and then implementing it.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/05/08/...

I see your point, but there have been hoards of VARs (which often miss the VA of their acronym) doing exactly that for years, and in many cases the companies are very comfortable with "their" VAR and Oracle trying to cut out that middleman step will not be undertaken lightly (by Oracle).

"Oracle trying to cut out that middleman step will not be undertaken lightly (by Oracle)."

Why not? That's like saying Oracle would not take lightly alienating someone like SAP, whose software ran on Oracle (does it still?), by directly competing with them. I think anywhere that Larry Ellison sees a revenue stream related to one of his products, he wants it for himself.

It's called avoiding channel conflict. If I'm buying Oracle from VAR V1, it is in Oracle's best interest to ensure that V1 continues to sell me Oracle, even if it's Oracle on IBM, HP, EMC or other gear.

If all of the sudden they stick a knife in V1's back, V1 will ensure that some substantial number of V1's new and where possible, existing, customers will seriously look at Oracle competitors.

It's not the same as NewEgg competing against mWave by deciding to add computer cases to their product line to make them a one-stop shop.

By all means Oracle may transition over to being a one-stop shop, but it's more likely in the short-term to work with their VARs rather than pit themselves against their resellers.

VARs add their own fees on top, and the activity requires expertise that they may or may not have. Any mistakes they made, they can blame the individual parts' vendors and push you off.

The original vendor, however, can take a little responsibility in the matter. When you call Oracle about a problem, they can't really push you off onto someone else.

Ah I like your description. Finally I see the attraction.

So do you think those of us with a combination of Oracle and Solaris skills are now more or less valuable? Do Oracle have a history of subcontracting to 'partners'?

The #1 knock against the Oracle Database is its price. The #2 knock against it is the difficulty of managing it.

For the last 10 years, Oracle has been continuously attacking #2 so that enough people will overlook #1. Now, Oracle is just about as easy to set up and configure as MySQL. It really can't get much easier to configure than it already is.

That is why they are going down the stack to the operating system and hardware. They want you to be able to order a box from them, plug it in, and instantly have Oracle running. Companies will save money because they will need fewer DBAs and and fewer sysadmins.

It is the same strategy that Microsoft is pursuing, except Microsoft also wants you to migrate from your own servers to Microsoft-managed servers in Microsoft's data centers.

I'm not sure most IT departments really want a seamless, easy-to-use and easy-to-administer solution. Judging from the IT shops I've worked in, I'd say that they prefer the opposite. It employs more people for longer amounts of time that way.

They also tend to prefer expensive 3rd-party vendor software with expensive support contracts too. That way, they can increase their budgetary needs year after year and inflate their importance to the company who sees IT as a cost-center, not a place to save money through technology innovations.

You always have to judge these kinds of things not by what they say, but by what they do.

The risk seems to be separation of the staff from the IP. How many people are mission-critical to things like Java or the server/storage hardware lines (or Solaris)? How many people can be viewed as "opportunities for outsourcing/offshoring"? If these jewels aren't dependent on Sun-specific employees, it might be a bloodbath.

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