Eye on Oracle

May 19 2011   2:24PM GMT

Yikes: Analyst calls Oracle a “parasitic” vendor

Mark Fontecchio Mark Fontecchio Profile: Mark Fontecchio

Everyone’s piling on.

A recent report by analyst Rob Enderle calls Oracle a “parasitic” vendor “that is focused on products and selling and the best managed, and has instrumented everything but the customer.” Enderle’s report followed the recent survey results from Gabriel Consulting Group that Oracle customers’ loyalty may be waning.

Enderle listed three major factors that he feels are warning signs.

First, he cited a warning related to hardware prices. Over the last year, Oracle has altered its processor core factor table, a document that helps determine licensing costs for different processor types. Generally speaking, Oracle reduced the licensing factors for some Oracle (previously Sun) hardware while increasing the factors for some competitors. Bottom line: It might cost you more to run Oracle on competing hardware. In addition, Oracle announced that it would no longer support software development for Intel Itanium, the main processor used in HP Unix servers. IT users in general were not pleased.

It seems like this was a case of Oracle taking it too far. Changing its processor core factor table caused some grumblings in the back channel, but it wasn’t entirely unexpected. Oracle acquired a hardware company, and it’s not surprising that its own sales and policies would favor its own products.

But the dropping of Itanium support was a bigger deal. It was bigger than I initially thought it was. After all, I figured, Itanium has long been called the Itanic. Ever since it failed to become the all-encompassing processor that Intel initially hoped it would be, everyone has been waiting for it to go away completely. But the way Oracle handled the situation – saying in a press release that Itanium was nearing its end of life when executives from HP and Intel have vociferously denied it – has some end users wondering what platform is the next one that Oracle won’t support. One of Oracle Database’s claims to fame in the beginning was its portability to multiple platforms. Now there is a concern that Oracle is getting away from that. I’m not sure how well founded that concern is, but there is no doubt it is a concern. A recent IT user survey, 95% of which were Oracle customers, found that about half think Oracle wants to reduce the amount of platforms it supports.

The second sign Enderle points to is Oracle’s hostile virtualization policy toward VMware. I think this is something of an outdated criticism, however, or at least it’s not nearly as bad as it used to be. This month Enderle criticized Oracle’s policies of running Oracle on VMware. Unfortunately, to help prove his point he linked to 2009 post from the blog of Chuck Hollis, an EMC marketing VP. The truth is that, yes, Oracle would rather all its customers run Oracle VM as their virtualization hypervisor. But it has made strides in better supporting Oracle on VMware. Last year it announced that it would support Oracle RAC on VMware, which it previously would not do. Unfortunately, Oracle’s VMware support policy is like Jekyll and Hyde, with support personnel willing to help but sales reps looking to scare people off VMware. The result? Customer confusion. And that’s not a good thing.

Finallly, Enderle points to the “revolving door on CFOs” at Oracle. Enderle is spot-on there. The Oracle CFO position has seen significant turnover in the last decade. Jeff Henley, Harry You, Greg Maffei, Safra Catz, Jeff Epstein and now Catz again is how it’s gone. Enderle thinks this may be a warning sign that Oracle’s financial picture might not be as rosy as it paints during every quarterly earnings call. Typically speaking it’s not a good sign when a CFO resigns without reason, as Epstein recently did, but as of now it’s all speculation. But it is certainly something to keep an eye out on.

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