Getting a Head Start

Compaq and Oracle team up to work on midmarket solutions.

Compaq Computer and Oracle Corp. are about to jointly build a new base of faithful integration and consulting partners to push their combined product lines into midsize companies.

That dual effort sets the stage for an increasingly heated battle among a number of giant vendors that focus on partners as a key piece of their go-to-market strategies.

In recent months, IBM, Microsoft and Sun Microsystems all have targeted solutions providers that can focus on the middle market because none of them has the longstanding relationships or vertical focus necessary to sell into that space. But while they all consider that a vast untapped market, they are fighting for a limited number of partners and frequently are forced to share the same ones.

Plans between Oracle and Compaq are still on the drawing board and revolve around an alliance between the two companies that was disclosed last June, but which largely went unnoticed because it was eclipsed by controversy involving Oracle sifting through Microsofts trash. The goal is to differentiate Oracles 9i database by including clustering technology developed by Compaq using its Tru64 Unix operating system running on Alpha processors.

Shake Hands "This is all about channels development, training and awareness," says Jacqueline Kahle, Compaqs VP of Unix marketing. "Weve each agreed to put $15 million a year into a joint development fund for the next three years."

Kahle says the two companies will begin developing a base of partners starting now, so that when 9i can be clustered—a development effort slated for completion by year-end—the partner base will be in place to bring it to market.

At least a portion of the partner recruitment effort will fall on the shoulders of Compaqs midrange distributors, including Avnet and Pioneer.

Compaq officials say that while the overall technology market is soft, this early effort will take advantage of a huge opportunity.

"When you look at the projections for transaction volumes for e-business over the next three years, only 90 percent of the enterprise infrastructure is in place," says Rick Frazier, VP of marketing at Compaqs business critical server group.

Subtle Ironies The efforts by Compaq and Oracle could not be any richer in irony, however. Compaq bought Digital Equipment in 1998 largely because of its consulting group, but with PC prices continuing to plunge, it is banking more heavily than ever before on back-end technology developed by Digital. Still, to get there it will need a base of sophisticated midrange integration partners that Digital once owned, but which languished under the Compaq acquisition. Compaq focused instead on a high-volume reseller channel that secured its place in the PC marketplace.

The irony gets even thicker. Compaq is now banking much of its future midrange push on the archrival to its old RdB database, which was developed by Digital. Its also banking heavily on a superfast version of Unix, which was developed by Digital even though former Digital CEO Ken Olsen repeatedly panned Unix as "snake oil."

Not Clusterphobic Oracle, meanwhile, has been schizophrenic about working with partners. At times it has relied on them, at other times it has competed directly with them. Nevertheless, the company now finds itself in need of a base of partners that can move its databases downstream from the Fortune 500. That, in turn, will open doors for Oracles process-management applications, which compete with the likes of PeopleSoft and SAP.

Still, Compaq isnt putting all of its eggs in Oracles basket. Most of the clustering technology remains in the Tru64 Unix kernel and is not easily moved from one platform to another.

"It isnt everything," says Kahle. "We and Oracle have a common agenda. We want to move clusters up to 60 percent to 70 percent of all systems sold and make clustering easy."

Nor is Oracle betting the bank on its relationship with Compaq. In fact, Compaq executives say at least some of the clustering technology will end up on other platforms. But they add that Compaq is the only company that doesnt directly compete with Oracle. And just for added measure, Compaq intends to keep the crown jewels well hidden and protected by patents.