An Oracle for the Future

 
 
By eWEEK Editorial Board  |  Posted 2003-07-28
 
 
 

Mergers can make sense when customers can be better served by complementary products sold by a single vendor in a market with plenty of choice. Right now, there is lively competition in the business applications arena, although SAP is the largest vendor by a significant margin.

The PeopleSoft merger with J.D. Edwards, recently approved by shareholders, will mean one fewer vendor, to be sure, but it will at least put together two companies with complementary offerings.

Oracles bid for PeopleSoft, now including JDE, appears to have two goals: eliminating competitors and building a size that compares more favorably to SAPs. Neither objective offers much to customers. Further, theres considerable confusion over whether Oracle will support PeopleSoft products on SQL Server.

Although Ellison might be excused on competitive grounds for wanting to eliminate a rival vendor, his actions run counter to the strategy that built Oracle into the dominant database vendor. That was accomplished via hard-core engineering and hardball sales tactics. Instead, Ellison and Oracle have become scavengers, a term Ellison once used to describe merger-happy Computer Associates. PeopleSoft is first on Oracles list, but, brandishing a cash hoard, Ellison says no vendor is safe. "Were in a position to buy almost anything," he told financial analysts in a recent conference call.

The madness behind Ellisons method may be in his stated belief that the IT industry is in a state of mass consolidation. Ellison has said there are some 1,000 Silicon Valley companies that arent needed and should go out of business.

That is so last year. The IT industry is emerging from a three-year deep freeze. The recession actually ended in 2001, according to the National Bureau of Economic Research. Ellison apparently thinks that the tech economy is still sick and that the only cure is to acquire, acquire.

Job One at Oracle should be winning back the database industrys top spot from IBM, which recently wrested it from Oracle, thanks to its venerable DB2 database. How could the highflying Oracle lose its No. 1 slot to the supposedly plodding IBM? One answer might be that Oracle was taking its users for granted. Many of them have complained in our pages about high prices and lackluster service.

IBM has been seeking to take market share on every front possible in the past three years. Combining technology with services appears to work for Big Blue. Theres every reason to believe that technology innovation, first-class service and more reasonable pricing would work for Oracle. A rampant acquisition strategy will only move Oracle further from these lifesaving fundamentals.

Oracle is a great company and a worthy competitor—and it will be in the future, if it can stick with the business strategy that has taken it this far.

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