The Battle for Market

By Renee Boucher Ferguson  |  Posted 2006-07-18 Print this article Print

Share"> Phillips said Oracle is on track with its five-year plan to grow 20 percent annually. Phillips said the company will rely on market-share growth rather than an uptick in technology spending to increase profits. "Right now it is about gaining market share. We think our destiny is up to us now, if we execute," he said.
Phillips also said he expects 15 percent of the companys profit to come from new business and the remainder from acquisitions—though he doesnt believe there are any big buys left to be had.
Like SAP, Oracle is looking to the midmarket for more applications business. SAP is expected to focus on building out its Business One suite for the midmarket in the coming fiscal year, while Phillips said Oracle is setting its sites there as well. Oracle is also looking to vertically focused applications to pull in business. "Industry applications are so much more important than ERP," said Phillips. "We have a lot of industry applications and well get more." But the real question is whether SAPs second quarter miss or Oracles fourth-quarter boon are indicative of any real movement for either company. SAP will detail on July 20 that its license revenue for the second quarter grew to only 621 euros ($778 million), rather than industry expectations of 681 euros, or $853 million. According to SAP chief executive Henning Kagermann, the earnings miss is largely due to timing—the company wasnt able to complete all the deals in its pipeline for the quarter—rather than any indication of market fluctuations or customers fleeing to Oracle. "We have to look at strategy a bit more long term," said Kagermann during a July 13 call with press and analysts. "Look to the consecutive quarters where we out-performed the market and increased shares. Now we have one quarter where we come in a little less. It doesnt mean SAP isnt strong. It shows SAPs strategy is the right one." SAP co-founder discusses competitors, potential buyers. Click here to read more. While analysts have largely been behind SAPs strategy—many see the quarter miss as a bump in the road rather than indicative of larger issues—that wasnt always the case with Oracle. During the Q&A portion of Oracles July 18 call, one analyst said: "Two years ago when you embarked on the integration trail [of numerous acquisitions, including PeopleSoft and JDE] we all thought you had a tremendous amount of work to do. It appears youve gotten most of it done. Now Im trying to figure out how." Phillips said that Oracle has taken some different approaches in the last couple of years—it has relied much more heavily on standards-based development, taken customer concerns to heart, and opened up much more to ISVs (independent software vendors) and system integrators. "For the average customer this has been a pretty good experience," said Phillips. "Fast forward to today [from 2004 when Oracle acquired PeopleSoft and JD Edwards] and companies like buying from us. Two years ago it was different. That has just completely turned around for us." Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.


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