Channel Marker

Jun 27 2008   10:08AM GMT

Ellison on ‘on-demand’

badarrow Barbara Darrow Profile: badarrow

Larry Ellison had some interesting thoughts on the on-demand model, especially intriguing as he retains his interest in NetSuite, the on-demand ERP provider. His ownership stake, which might appear to be a conflict since Oracle competes with NetSuite, is in some sort of blind trust.

Oracle’s CEO said the company’s on-demand business posted 25% growth year over year but seemed to agree with a questioner that it had been hovering at about 3% of overall revenue for some time.

“We’ve been in the on-demand business for almost a decade. We’re the second largest provider of sales automation software behind and Q4 was the first quarter we actually made money [at it],” he told analysts on the fourth quarter and fiscal year ’08 earnings call Wednesday night.

“We’re enthusiastic about it and we’ll get better at it.’

But… comes the big qualifier: “The entire on-demand industry has to get better at making money … doesn’t make much money and they’ve been doing it for ten years. No provider has done a good job at profitability. The last thing we want to do is have a very large business that is not very profitable and will drive our margins down.”

Indeed, the “p” word is the big gotcha in this cloud-computing model of web-delivered software services. Other legacy software players, most notably Microsoft, are wrestling with the issue of staying current with the trend without endangering its cash-cow software packages.

But in the Oracle context, you’ve got to wonder what Ellison thinks about NetSuite’s performance. In early June, NetSuite said it would post a bigger than expected 2008 loss. citing its acquisition of OpenAir, a professional services automation software maker. The cash deal was valued at $26 million.

Barbara Darrow can be reached at

 Comment on this Post

There was an error processing your information. Please try again later.
Thanks. We'll let you know when a new response is added.
Send me notifications when other members comment.

REGISTER or login:

Forgot Password?
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Forgot Password

No problem! Submit your e-mail address below. We'll send you an e-mail containing your password.

Your password has been sent to:

Share this item with your network: