Whats Next for Oracle?

By Matthew Hicks  |  Posted 2003-09-04

Whats Next for Oracle?

Heading into its major trade show of the year, Oracle Corp. is at a crossroads. It is launching what its executives say is its biggest new technology release in a decade, and it is doing so in the middle of an ongoing tussle to take over business applications competitor PeopleSoft Inc.

At next weeks Oracle World show in San Francisco, Oracle CEO and Chairman Larry Ellison will have plenty to talk about. At the top of the agenda will be grid computing.

Oracle plans to unveil at the show the 10G versions of its database, application server and Enterprise Manager management software. All three incorporate new technology to support grid computing, which in Oracles definition broadly means the ability of many small servers to act as one where processing resources can be reallocated among various applications as needed.

"This is the single biggest release or announcement weve made in at least a decade and is really the first time weve synchronized the announcement of all the technology products," said Bob Shimp, vice president of platform marketing at the Redwood Shores, Calif., vendor.

The challenge for Oracle will be selling its grid approach to customers who commonly associate grid computing with the search for extraterrestrials or high-end university research, not enterprise computing, analysts say.

"Surprisingly few companies want to do grid computing right now," said Mike Gilpin, a research director at Forrester Research Inc. "Theres a lot more hype around the subject area than actual company buying of the technology."

At Oracle World, Oracle will focus on explaining its grid computing approach to customers. It will be presenting customer examples, expert testimonials and demonstrations of 10G, Shimp said. The company also is trying to differentiate its concept of grid from that of its competitors, such as IBM and Microsoft Corp.

Its grid approach is about more than greater flexibility in computing. It is a culmination of Oracles push toward lower-cost computing—away from the large SMP servers on which its database has traditionally run and onto Intel-based servers and, ultimately, Linux.

"The tables having really turned where we are emphasizing the low-cost components," said Charles Phillips, an Oracle executive vice president. "(Microsoft) used to say to buy low-cost components and PCs and tie them together, and now they dont. And now were saying it because we have this breakthrough in grid."

Oracle also is trying to convince customers to consolidate more and more of their applications and infrastructure onto one Oracle platform with 10G. It echoes a consistent mantra from Ellison and other executives: that Oracle can simplify computing if customers standardize on its technology and applications, rather than attempt to integrate a hodgepodge of vendor technologies and applications.

While each of the 10G products has grid capabilities individually, they were designed to work together as a complete infrastructure, Shimp said. "Were not trying to create heterogeneous grids," he said.

"What we see is Oracle focusing on moving from being just a database company to expanding (its) role as an overall stack," said Jeff Comport, vice president and analyst at Gartner Group.

Though Oracle may be pushing ahead of its customer base, the technology direction is a useful one for customers, Gilpin said—more for some of the specific capabilities the 10G releases will provide than the grid approach overall. For example, the latest release will allow the clustering capabilities of the database and application server to be more aware of each other so that a failover is better integrated between the two, he said.

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Next page: Does PeopleSoft deal distract?

The PeopleSoft Factor

While Oracle talks grid, customers remain worried about the ramifications of its continued effort to purchase PeopleSoft. Since its initial offer in June, Oracle has repeatedly extended its bid to buy PeopleSoft and is waiting for the end of an antitrust investigation from the U.S. Department of Justice, which Phillips expects to end in late November.

"You hate to see a company doing that because it takes away from the emphasis on its core products," said Oracle user Howard Muffler, director of enterprise services at Embry-Riddle Aeronautical University, in Daytona Beach, Fla. "If theyre worried about integrating a new business division and supporting all these new people theyre taking on, then how much effort and emphasis will be focused on the core product and the core business?"

But Phillips said that the PeopleSoft bid is not a distraction for development teams and is consuming only the time of a few top executives. The takeover attempt may be the biggest news in Oracles applications business, but Phillips said Oracle is committed to growing its applications business whether or not the acquisition pans out.

"It doesnt replace our strategy," he said. "It certainly can add (to it) if we buy the right company. And thats kind of one more thing in your bag in terms of generating growth and gaining market share."

Despite worries over the PeopleSoft bid, customers such as Muffler say they are pleased with Oracles technology direction. Embry-Riddle, an aeronautical school, uses not only the Oracle 9i database and application server but is running Oracles e-business suite for its enterprise resource planning applications.

Muffler, who admits knowing little about Oracles grid approach, said he has nonetheless embraced many of Oracles past efforts after initial doubts. The school has begun deploying some of its Oracle database instances on Linux and is considering moving to the Oracle Collaboration Suite, a move Muffler didnt expect when Oracle introduced the competitor to Microsoft Exchange little more than a year ago.

"We have a lot of faith in Oracle," he said.

With 10G, Oracle will be trying to capitalize on that customer faith for its new grid computing direction. The 10G releases mark only the beginning of the push, one that Shimp acknowledges will take several years for customers to embrace fully.

"Oracle 10G is not the beginning and the end of grid computing but a weigh station along the road to grid computing," Shimp said. "Even more and better technology is coming down the road."

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