Oracle's Ellison: Our target is
SAP
By Melanie Austria Farmer
Staff Writer, CNET News.com
October 6, 1999, 12:40 p.m. PT
Q&A: Why is Larry Ellison making it his mission to topple German
software giant SAP?
Because as the No. 1 business management applications software
company, SAP is in his way. And with typical hubris, Oracle's chief
Ellison vows he will also best rival Siebel Systems and any other
company that comes along.
For an encore, Ellison also wants to make Oracle the No. 1 provider of
hosted business applications on the Internet.
While Oracle, a $9.1 billion firm, is as well
positioned as any of its rivals to come out on
top, analysts have questioned whether it--or any
of the enterprise resource planning (ERP)
companies--will have what it takes to offer the
nation's biggest companies a complete online
business-to-business e-commerce strategy.
Oracle rivals--SAP, PeopleSoft, and Baan
included--are struggling to rewrite their software
for customers who are quickly moving toward
buying and selling on the Internet.
While Oracle has a more diverse business than
its ERP rivals, which includes databases and
application servers, it hasn't emerged unscathed
from the recent downturn in software license sales.
The company's stock took a small tumble last month after the company
failed to meet some analysts' first-quarter expectations.
Oracle executives also recently admitted that the company has muddled
the marketing strategy for its Oracle Application Server by selling it as a
stand-alone product, while also selling the Oracle 8i database with
built-in application server features.
Ellison sat down with CNET News.com this week to discuss not only the
application server market, but also the latest at Apple Computer, where
he serves as a board member, and the spin-off of several Oracle
divisions.
Q: Oracle missed some analysts' estimates in the first quarter. Can you
discuss what you expect for the quarter ahead?
LE: After (the first quarter), the entire management team thinks that we'll
have a better year this year than last year in regards to the growth in
our software licenses.
Even though we're in a year that crosses the Year 2K boundary, we're
very optimistic about our business. In the (enterprise resource
planning) ERP space, where we compete with SAP, PeopleSoft, Baan,
and JD Edwards, we're the only ERP company that's growing.
PeopleSoft is getting smaller, Baan's getting smaller, SAP's getting
smaller, JD Edwards is getting smaller and we're getting bigger in ERP.
We're the fastest growing (customer relationship management) software
business in the world. We continue to take market share in the
database business against all competitors. Right now, things are going
pretty well. We're pretty optimistic.
Q: Today's event was held to talk about the future of Oracle Business
Online, the company's Internet applications hosting service. Can you
give us an update on whether Oracle has any intention of spinning off
the business as it has others?
LE: We took Oracle Japan public and it's got a valuation of about $10
billion right now. We took Liberate (A company that makes software to
connect set-top boxes and other hardware to the Internet) public and it's
got a valuation of just under $2 billion right now. We plan to take
E-Travel (the company's travel software division) public. The next IPO
we'll have is E-Travel, which we're very, very optimistic about. If the
markets continue to grant very high valuations for Internet companies,
we'll continue doing that.
Q: What's new with Apple Computer? It finally released the iBook, but
Apple doesn't have a handheld yet to compete against the PalmPilot or
the Windows CE devices. Any word on Apple's future plans?
LE: With Steve (Jobs) back, Apple has again become an innovation
leader in our industry: Fabulous technologies like the new Apple display
technology and fabulous industrial design, fabulous new software
announcements. Will Apple do something in handheld? Steve doesn't
like to pre-announce things.
My opinion is that Apple is going to be the great digital appliance
company. As the appliances become digital, the very coolest
digital appliances will come from Apple--the easiest to use, the
prettiest to look at, the most successful will come from Apple.
Q: Can you give us an update on Oracle's plans to build a network
computer for the education market? Is that ever going to ship?
LE: Yes, we've got the network computer down to about $150. It's
a very, very cool, new machine. We actually have it up and
running and we'll be starting a little spin-off to get that thing rolling
(soon). It's a small box, not unlike our other network computers
except this has a CD-ROM in it and on the CD-ROM it has Linux
and Netscape and some other things. It has no hard disks. It has
Ethernet and a 56K modem. It plugs into a monitor and it gives
you Internet access, does everything Netscape Navigator does.
Q: How do you see the application server market shaking out?
There are dozens of competitors in the market, is Oracle going to
stay on top?
LE: I think we will be the leader. There are lots and lots of little
companies now in the nascent market. We don't think it makes
sense that there are a handful of database companies and dozens
of application server companies.
We think we have a great application server and it keeps getting
better, and we think we'll be the number one provider. But, right
now the market is still so youthful and so fragmented. It's hard to
say, but I'm pretty optimistic.
Q: Some analysts and customers are confused by your
application server strategy. You've built an application server into
the Oracle 8i database, but you've also got a stand-alone
application server. Can you set the record straight on this one?
LE: We do have an application server built into the database for
someone who wants to build a very simple environment with just
one server.
Separating the application server from the database server is for
larger environments. That's what our applications server is meant
for, it's meant for larger companies in larger environments. It's
very important for what we're doing, but keep in mind, again, this
is a very, very small business right now globally. If we had 100
percent of the application server sales in the world, you wouldn't
even notice.
Q: Your rival Siebel says your customer relationship management
(CRM) applications (which help companies track sales and
customer service) do not stack up to theirs and some analysts
agree. Could you respond to that? LE: Gartner Group did a report
a couple of months ago saying that we were dead last in CRM in
terms of features and functions. They've (since) moved us up to
second in CRM.
We're the No. 2 CRM company in the world and we're growing
faster than Siebel--much faster than Siebel--and the reason is our
CRM software is pure Internet.
Now, Tom [Siebel] has purchased a new word processor that
inserts the word "Web" into every sentence that comes out of a
document from Siebel. Siebel is the classic born-again Web
company. Their engineers have done a good job of changing the
brochures, but they have a lot more work to do on the software.
The following are true of Oracle CRM: The only way to access an
Oracle CRM product is through a Web browser. Now, ask Tom
that same question. Tom has a problem with the truth. They still
sell primarily client-server stuff. HP picked us over Siebel because
we have modern Internet technology and they have the old,
client-server stuff. We expect to pass Siebel pretty quickly.
Q: Now that most large business applications firms are trying to
come up with a CRM strategy, what do you see happening to the
smaller players--Clarify, Vantive, and Pivotal?
LE: If Siebel can't compete, doesn't have the resources to
compete, certainly poor Clarify or Vantive doesn't have the
resources to compete. In the context of an overall push, our target
isn't Siebel, our target is (No. 1 business software maker) SAP.
Oracle's target is not Siebel, it's SAP. The way we beat SAP is to
beat Siebel in CRM and to beat Ariba in Internet procurement and
surround SAP. We need to win in this new era of Internet
computing. We need to become the No. one application company. |
