Ellison: Time Is Right for Hosted Apps

SAN DIEGO—Larry Ellison, looking weathered but unshaken by Oracle Corp.s recent crushing loss to Alinghi in the Louis Vuitton Cup, blew some wind in the sails of the application service provider market at the Oracle Appsworld show here Tuesday.

Ellison, commenting on Oracles renewed interest in outsourcing, said the time is right for hosted applications, especially those based on Oracles E-Business Suite 11i. Instead of concentrating on the applications, Ellison chose to focus on costs.

Ellison said that Oracle is trying to make costs “predictable.”

“We want to tell you before we begin how much it will cost,” he said. “In other words, we want to tell you in advance what the TCO will be.”

The larger-than-life chairman of Oracle said his company will tell customers how much outsourcing will cost and how much it will cost to maintain, and the company will do it “before you sign on.” “We will guarantee it,” he said.

But Ellison admitted that outsourcing isnt an all-or-nothing business model: “We dont have to outsource 100 percent. We can be your graveyard shift. We can do your bug fixes. Let us do this piece. Youll do that piece. We will tell you what the TCO will be, and well split up the labor.” In the past, ASPs were criticized for boasting that they could do too much, while delivering too little.

Ellison, speaking for only about 30 minutes, significantly less than his typical 60-minute diatribes, then launched into his often repeated attacks at his competitors.

He boasted that Oracle is almost entirely developed on an open programming language: Java. In the old days, he claimed, applications were built using proprietary tools. “Virtually all of our competitors used proprietary programming languages to develop their applications.”

If you wanted to extend SAP, customers would have to learn ABAP, he said. “If you use SAP, you need to go to ABAP-4 programming school,” he quipped. “If they wanted to learn Peoplesoft, theyd have to become experts in Peopletools.”

Now the plan is to “gracefully add to our E-Business Suite.” And we want to use “modern programming tools. And the most modern programming tool we found was Java. … It is the Internet standard.”

Ellison also repeated his new mantra. “The single most interesting thing is that we encourage all of you to reduce the number of separate application databases that you run. The biggest single problem thats caused the most disappointments is that it seems like you can never get information out of those systems. You spend a fortune on those systems and cant get the simplest answer out of them.”

Ellison then praised Linux and Intel systems for being less expensive and faster. He claimed that Oracle adopted Linux “not because it was cheaper” but because it was more reliable and faster.

Ellison, however, was less glowing about the Macintosh operating system on the desktop. “The Macintosh is very important to the Macintosh community,” he said. While he said that Oracle will support the Macintosh as long as Apple Computer Inc. supports Java, he hinted that Linux desktops running Oracle applications are in the cards. “There will be support on Linux. More and more people will use that. We intend to give you choices.”

While Ellison did not target Microsoft as much as usual, he did ding the Redmond, Wash., company on Exchange. “Theyre going to ditch Exchange,” he said. Microsoft is moving to a database-driven e-mail platform, something that plays right into Oracles hands, Ellison added.

Before he was finished, Ellison made one more prediction, albeit a joking one: Oakland 42, Tampa Bay 3 in Sundays Super Bowl.