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Oracle CEO Larry Ellison has been talking about challenging IBM as a full-service IT supplier since first broaching the idea of buying Sun Microsystems. Ellison has taken another step in that direction with the hiring of ex-HP President and CEO Mark Hurd, according to industry analysts.
Hurd comes to Oracle with a strong background in managing large companies that offer both hardware and software, have strong services divisions, have bought and integrated other companies, and can make their IT offerings work together in an integrated fashion.
All those attributes can help Oracle work toward its stated goal of reaching $100 million in revenues and challenging IBM. Hurd’s move to Oracle is good for both the man and the company, analysts commented.
All that said, it won’t be an easy feat to take on IBM.
“As Oracle continues to integrate its acquired Sun assets with its database, middleware and applications platforms, the addition of an execution-focused executive like [Hurd] is a huge boost to the company,” Stuart Williams, an analyst with Technology Business Research, said in a report Sept. 7.
“Oracle is plotting a strategy that takes it into direct competition with traditional systems heavyweight IBM. IBM has huge advantages-with long-time enterprise customers, a services business, a strong IP-backed hardware business and a $20 billion software business of its own. The ability to tie software with hardware to specific workloads such as data warehouse or online transaction processing meets rising customer requirements for easy-to-use devices that add capabilities without adding the cost of build-it-yourself solutions.”
Hurd resigned under pressure from Hewlett-Packard Aug. 6, after a former HP contractor claimed that he sexually harassed her. An internal investigation found no basis for the sexual harassment complaint, but the HP board of directors said Hurd falsified some expense reports in an effort to conceal his personal relationship with the contractor, Jodie Fisher. The board concluded that Hurd had violated HP business policies.
Within days, Ellison, a close friend of Hurd, sharply criticized the HP board in an e-mail to the New York Times, claiming that the company was making a mistake and pointing out that no basis was found for the initial complaint against Hurd.
Oracle announced Hurd’s hiring as Oracle co-president Sept. 6, replacing Charles Phillips, whose reputation also took a blow this year when he admitted to an eight-year affair. Hurd and Safra Catz will be co-presidents, both reporting to Ellison.
A day after the hiring, HP filed suit against Hurd in a California state court, saying Hurd could not serve as president of Oracle without violating a confidentiality agreement that was part of his almost $40 million severance package.
That said, Hurd’s hiring should be a significant competitive win for Oracle, according to analysts.
In Hurd, “You have an experienced executive who did run a company that size,” said Gartner analyst Kenneth Chin. “Hurd brings a lot of good qualifications for running a company the size of HP or IBM.”
In fiscal-year 2009, HP generated more than $114 billion in revenue. For its fiscal 2009, Oracle saw almost $27 billion. Company officials are looking to see Oracle grow into a $100 billion company.
In addition, the ex-HP CEO comes with a strong background in hardware and services, which Oracle will need if it wants to compete with HP and IBM, Chin said.
Hurd Faces Familiar Challenges at Oracle
When Oracle bought Sun, Ellison boasted that Oracle software running on Sun hardware offered a more complete and competitive package that anything IBM could offer. In a statement Sept. 6, Hurd agreed.
“I believe Oracle’s strategy of combining software with hardware will enable Oracle to beat IBM in both enterprise servers and storage,” Hurd said.
He pointed to Oracle’s Exadata offering, which tightly integrates Oracle software-including database and business intelligence solutions-on Sun hardware as an example of the direction Oracle is heading in, and said more systems will be announced at Oracle OpenWorld, which begins Sept. 19.
Such appliances are gaining attention from businesses, according to TBR’s Williams. He noted that a recent TBR survey found that more than half of responding enterprise customers had bought at least one higher-end appliance in the last 12 months.
“Exadata is going to be a big part of what Oracle is going to be bringing out over time,” IDC analyst Jean Bozman predicted in an interview with eWEEK.
Oracle is looking to optimize its software solutions, and having intellectual property in both hardware-from Sun-and software will only help with those optimization efforts, as has been illustrated by IBM with its mainframes and Power servers, Bozman said.
Gaining Sun’s hardware was a significant step for Oracle anyway, she said; having someone with Hurd’s experience in dealing with both hardware and software, as well as services, will only help. He gained that experience not only at HP, but also earlier, during his time as CEO of NCR, with its Teradata data warehousing software.
“With or without Hurd, the acquisition of Sun heralded a new chapter for Oracle,” Bozman said.
However, there are differences between what Oracle is doing and what HP does. HP relies heavily on selling its x86-based ProLiant servers, which run on processors from Intel and Advanced Micro Devices. And while Oracle will still sell Intel-based systems, much of its focus will be on hardware based on its SPARC processors.
In addition, according to Gartner’s Chin, while HP does sell some appliances with integrated hardware and software, that’s not the bulk of its business.
“HP sold a lot of servers and sold a lot of storage, and it wasn’t all wrapped up into one [package],” Chin said.
Hurd also brings with him experience integrating companies, which will be useful to Oracle as it deals with Sun and other companies it’s acquired. Bozman pointed to HP’s acquisition of services company EDS as an example of Hurd’s experience overseeing a merger.
Oracle also needs to build up a services businesses if it expects to compete with the likes of IBM and HP.
Williams said all of this-coming to a major IT vendor that is looking to absorb another large company-should look somewhat familiar to Hurd.
“It is a ‘back-to-the-future’ moment for Hurd, who took the reins at HP under similar circumstances following HP’s acquisition of Compaq, where HP had to drive out the cost from the acquired firm and construct a more efficient supply chain, sales model and sourcing strategy,” he wrote.