Larry Ellison: Everyone Else Must Fail - ' Oracle and Web Services ' (
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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."
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.
"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."
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