Customers Drive Consolidation

By John Pallatto  |  Posted 2004-07-15 Print this article Print

The idea that customers will spend time and money working with "lots of different products from lots of different companies and try to put them all together is a mad idea," Ellison said.

Now more than ever, customers will move toward working with a few standard products and a few companies that can provide a broad range of technologies and applications, he said. "I think this indicates that a large number of companies will vanish," Ellison said.

Hes been saying for more than a year that the Silicon Valley software industry is ripe for consolidation. A key advantage for Oracle is that it will be able to acquire companies "that are located in town" or nearby in Silicon Valley and "that will make the consolidation easier for us."

Their close proximity will make it easier to integrate the acquisitions into Oracles structure and to retain the most talented managers, he said.

Click here to read about the hiring of Harry You as Oracles new chief financial officer.

Oracle makes about 10 to 12 corporate acquisitions a year, Oracle president Safra Catz said. Nearly all of these are small organizations, such as its late June acquisition of Collaxa Inc., a business process management software developer whose technology will become part of Oracles new SOA (service-oriented architecture) platform.

Expanding application software sales has been a major business goal for Oracle in order to remain competitive with SAP AG, Microsoft, IBM and others. It has also been a major justification for its $7.7 billion hostile buyout bid for PeopleSoft Inc. The U.S. Department of Justice is trying to permanently block this acquisition through an antitrust lawsuit.

Next Page: The nitty-gritty of Oracles acquisition strategy.

John Pallatto John Pallatto is's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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