Oracle Says It Won't Change NetSuite Product Prices, Structure

After Oracle completed its acquisition of cloud enterprise resource planning software provider NetSuite on Nov. 7, executives with both companies detailed what’s in store for customers.

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REDWOOD SHORES, Calif.—“More” was the operative word at an event here at Oracle headquarters Dec. 1 that focused on the software giant’s acquisition of NetSuite.

“It’s important to say that we’re thrilled,” said Oracle co-CEO Mark Hurd, who repeatedly insisted there was very little overlap between the two companies.

Both Hurd and NetSuite executives on hand said the $9.3 billion acquisition means NetSuite would have more access to developer resources, data centers for global expansion, sales and marketing and access to various Oracle services including Infrastructure as a Service and Oracle Enterprise Performance Management (EPM).

He called NetSuite key to Oracle’s overall cloud strategy because it brings with it hundreds of small-to-mid-sized customers. “Now we can go from startups to the largest enterprise companies with our solutions,” he said.

Oracle announced its intention to acquire NetSuite in July, but the deal just closed on Nov. 7. Hurd said a major reason for the Dec. 1 briefing was to discuss what the deal means for each company’s customers. As public companies there were restrictions on what officials could say while the deal was pending regulatory approval.

One point he made clear was that NetSuite will continue as its own global business unit and that Oracle intends to invest in the product line. “NetSuite products will go on forever. Our intent is to keep NetSuite and invest in it,” said Hurd. “Customers will get access to all of Oracle’s resources and Oracle’s [software] stack .”

Later in response to a question from a NetSuite customer, Hurd said there are no plans to change any of NetSuite’s pricing. “Our intention is not to do anything from a pricing perspective, but you will probably have the honor of a broad set of people trying to cross-sell you,” he said, earning some laughs from the audience.

Pund-IT analyst Charles King said Oracle’s acquisition of NetSuite was a good move strategically. “Though NetSuite has never been profitable, its losses are tiny when compared with Oracle's overall profitability,” King told eWEEK.

“Plus, since NetSuite has enjoyed solid growth—more than doubling its revenues between 2012 and 2015—its momentum is something Oracle can build on. The company will provide its new parent with valuable additional exposure among SMB and add muscle to Oracle's cloud strategy and offerings.”

King also says some customers may be concerned that Oracle’s large enterprise focus will make NetSuite something of a second class citizen at the company. But he notes Oracle founder and chairman Larry Ellison helped found NetSuite and was its biggest investor with a 41 percent share of the company, a position that stands to earn Ellison a cool $2.48 billion in cash. “Ellison has a close relationship with NetSuite and that should quell customer concerns, at least in the short term,” said King.

NetSuite CEO Zach Nelson was notably absent from the event, but Hurd said Nelson is staying on as an evangelist for the NetSuite cloud suite and ERP. “He’s done a fantastic job with Evan [Goldberg, NetSuite founder] and Jim [McGeever, NetSuite president] and we’re thrilled to have him help us,” said Hurd.

Goldberg recalled NetSuite was one of first Software-as-a-Service and cloud computing companies when it was founded in 1998 before those terms were popularized by Salesforce.com and others.

NetSuite was originally called NetLedger and its roots are in financial applications. “Since then we’ve built it out to provide everything you need to run a business,” said Goldberg.

He said a key to the company’s success has been that it’s based on one unified system, on one database and a single global repository for all a company’s core business processes.

“A customer using a Web store or a collections person are all working with exactly the same data and it flows seamlessly,” said Goldberg. “Larry Ellison had the vision to deliver application business services over the Web and we’ve spent 18 years delivering cloud applications. We’re excited to share our best practices with Oracle.”

NetSuite President Jim McGeever said that as part of Oracle, NetSuite can now scale much faster than before, particularly internationally. As an independent company McGeever said NetSuite sometimes had to focus on things that were more important to investors than customers.

“For example, it was important we show a growth in the number of billings, how many invoices we were processing,” said McGeever. “That’s not really the most important metric, but that’s how we were being measured. I’m excited that now our focus is exclusively on serving customers and expanding our product’s capabilities.”

David Needle

David Needle

Based in Silicon Valley, veteran technology reporter David Needle covers mobile, bi g data, and social media among other topics. He was formerly News Editor at Infoworld, Editor of Computer Currents...