Oracle and Web Services
Where does Oracle position itself in the emerging Web services world? So far, it hasnt spelled out much of a strategy. "Can Larry take it to the next step?" asks former board member Joe Costello. "I understand what the next step is at Microsoft, but there is no articulated vision at Oracle.""Guaranteed, you will never have to pay for another upgrade. You will never pay for another piece of software. You will never pay for another piece of hardware," Ellison says, predicting that this could be a $1 billion business for Oracle in a few years. Cliff Godwin, senior vice president of applications technology, says Oracle has more than two hundred customers using its Oracle.com hosted solution. "We believe in hosting as a strategy and in software as a service," Godwin says. "We will be putting out a lot of new hosted offerings. We want to build an economy around that and have other partners come in with value-added services, such as those with expertise in retail or banking." So far, however, the hosted business has proved only a drop in the bucket for Oracle, and smaller, nimbler competitors like Benioffs Salesforce.com are already there. "Its a pipe dream," says Lane. "Its not in Oracles DNA to work that way, delivering a service month after month. Software development is very different than operating the applications for a customer." He recalls a conversation he had with Ellison in 1999, when the on-line business was getting started. Lane told Ellison he needed to put a strong operational person in charge to make sure customer problems got solved. Ellison retorted, "Well put an NC on-site with a customer," running the same applications. "If a customer calls in, well tell him to walk over to the NC. If the applications working there, go call your network provider. Its a network problem." Its doubtful that many companies would want to entrust their ongoing software needs to a company whose CEO has attitudes like this. "Oracle has had its best days," maintains Meta Group analyst Will Zachmann. "Theres no way they can grow like they did in the 1990s. More likely, they will go into a decline." Hes not as concerned as other observers about the succession problem. "Larry doesnt seem to be going anywhere, so I dont think the cult of personality is the big issue. Its how they respond to challenges from Microsoft and IBM. If they lose their core [database] business, the rest of it will crumble." Zachmann adds that Ellisons aggressive, expansionist management style "works as long as youre winning. It remains to be seen how well it works in a defensive mode where theyre not leading a market. There are no more quick victories." Want to know whats really going on at Oracle? Join author Karen Southwick all week in our forum for the inside scoop!
Recently, Ellison has talked about moving into hosted applications. Instead of buying a suite of software that they have to install, customers would pay Oracle monthly fees to provide and maintain what they need from its own data centers.