Eye on Oracle

Feb 17 2010   4:25PM GMT

Sailing against IBM may be rougher for Larry than the America’s Cup

Ed Scannell Ed Scannell Profile: Ed Scannell

Larry Ellison is having himself a year.

First, he outlasted the European Commission (EC) which held up his attempt to acquire Sun Microsystems for over four months. Now he has followed that triumph with another by winning the America’s Cup, one of the most valued trophies in all of sports.

Ellison’s BMW Oracle Racing team won the Cup over this past weekend sweeping the two-time defending champion Alinghi 2-0, just off the coast of Valencia, Spain. Naturally, with Ellison involved, so was technology. His trimaran, aided by the largest wing sail ever built, simply overpowered Alinghi’s catamaran in the two races.

Larry Ellison may be brash and boastful, but he is also patient and focused. This year’s win ended Ellison’s 10-year mission to win the America’s Cup, marking the first time an American challenger has claimed the trophy in 23 years.  This is the same sort of dedication he applied in acquiring PeopleSoft after years of pursuit and this latest battle with the EC.

Speaking of the technology used by BMW Oracle Racing, it’s funny Larry didn’t give any props to NetSuite’s cloud computing based business management software. Apparently the team uses that business suite for a range of accounting, reporting and international tax compliance functions. He probably would have mentioned it, if it wasn’t cloud computing based.

If he decides the NetSuite product would be instrumental in bringing him another America’s Cup he can always buy it and grid enable it. I mean, what’s one more acquisition? In the first five weeks of the year Oracle completed its $7.4 billion acquisition of Sun and acquired two more companies, AmberPoint and Convergin. I am beginning to wonder if Larry made some sort of New Year’s resolution to buy a company a week in 2010.

But it is this display of steely resolve that Ellison’s major archrivals, particularly IBM, have to look forward to as he puts all the moving parts of Oracle and Sun together over the next year. It will take all of Ellison’s resolve and patience to ensure the long-term success for the newly combined company, along with maybe more than a little showmanship.

The first thing he has to do is to stop the steady migration of Sun customers over to IBM and HP’s hardware platforms. Sun has lost a significant number of accounts to its archrivals since the deal was first proposed on April 20, 2009.

A good way to start is to be straight forward with Sun’s remaining top accounts about exactly what hardware lines he is going to keep and what he is going to jettison. By selling a range of products and services directly to Sun’s top 4,000 accounts, Larry must treat these accounts more like strategic business partners, and do away with some of the overly aggressive, nickel-and-diming strategies some users accuse them of to win product and maintenance support deals.

Another way to hold on to skeptical Sun accounts is winning them over to Oracle’s still-not-quite-defined stack computing strategy. While the company made an appetizing pitch to its customers and the press at its Jan. 27 rollout, buying stacks of mission critical hardware and software is just not in the blood of large heterogeneous IT shops. This is where Larry’s showmanship will come in handy.

A third approach, and maybe the most difficult, would be to come up with an attractive and innovative licensing strategy for their various stacks and individual software and hardware offerings.

Lord knows there are legions of existing Oracle customers unhappy with the 22% maintenance fees the company charges, especially given the quality of service they get in return. And some Sun customers have one foot out of the boat anticipating Oracle will find a way to jack up licensing fees on a per processor or per box basis for hardware.

I have yet to hear of any such licensing program(s) being proposed that would convince Sun users to stay put. But if you have, or you have one of your own, let me know.

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