Eye on Oracle

Mar 19 2008   9:06AM GMT

Is Ellison rooting for Microsoft?

Shayna Garlick Shayna Garlick Profile: Shayna Garlick

It’s no secret that Larry Ellison thinks acquisitions are a great way of growing his company. But does this make Oracle any less innovative or authentic?  

According to Ellison in this New York Times article last week, many people in Silicon Valley think just that. Ellison hopes Oracle’s series of billion-dollar acquisitions — starting with his $10.3 billion bid for PeopleSoft in 2004 — have begun to change how the industry views consolidations.

“It’s bizarre that there’s a stigma to buying something rather than building it yourself,” he tells the NYT‘s Andrew Ross Sorkin.

Sorkin says that Ellison has not only made “hostile deals” acceptable, but has proven they can work. Ellison agrees: “They are copying us. Others would be foolish not to try.”

If this is true, then Ellison’s latest “copycat” is Microsoft, whose $44.6 billion bid for Yahoo was rejected last month. But what’s surprising, in this case, is that Ellison suggests he’s actually rooting for longtime rival Microsoft. Tech blogger Kara Swisher also questions what’s making Ellison root for his nemesis. 

Do you think Oracle’s (or any other company’s) acquisition history downplays its innovation? Would users be better off if Oracle built everything itself? Some of it?

3  Comments on this Post

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  • Marc
    No, these acquisitions do not make Oracle a "less innovative" company. There are two key factors when you evaluate these acquitions. The first is technology (or innovation). People are buying widgets, so you decide you are losing money if you don't get into the widget business. You start to research how much it will cost you to get a team of engineers together to design and build you're own widgets, then go compete against the rest of the (already established) widget market. After doing the math, it comes to light that it would be cheaper run to buy a leading widget manufacturer instead. Now, suppose it will not necessarilly be cheaper but may roughly be about the same expense? Then we look at the next factor, which is market share. If I am going to buy a widget company, why not buy one with a huge 'install base.' Their customers become my customers instantly, and now I can market some of my other products? There is also a third factor and this directly benefits the customers. In Oracle's case, they have gone out and purchased excellent products. Oracle benefits from the intellectual properties and resources that come with these purchases, and with programs like Applications Unlimited, the customer benefits from continued support of their current products. Some of these same factors also apply in the Microsoft/Yahoo case. Microsoft sees Google making rediculous amounts of money and wants some of it. It really does not make sense for Microsoft to try to "innovate" a competitor to Google at this point in the game, and from a "name recognition" standpoint, Yahoo is definitely the best target.
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  • Grant Czerepak
    Buying existing businesses does not diminish the creativity of a company. However, to really benefit from an acquisition I would certainly recommend reverse engineering what you buy to really understand what makes it tick. Then forward engineering it to integrate into your existing products. This is becoming simpler technologically, however it still has a ways to go. Oracle has taken advantage of the fact that its own product is the foundation of many of the products that belonged to the companies it purchased. I don't think Microsoft has the same edge with a company like Yahoo!
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  • Rashad
    What matters is that everything works and customers do not have to take a SINGLE step backwards to sustain their status quo.
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