Oracle's e-business pitch gaining traction
By Duncan Martell
PALO ALTO, Calif., Feb. 29 (Reuters) - After eating IBM's e-business dust for the past five years, Oracle Corp. (NASDAQ: ORCL), the leader in database and business management software, has started making strides to move out of Big Blue's shadow.
In the past week, Oracle has been the center of two of the biggest electronic-business projects announced to date. In the first, the company will serve as a technology partner for an online procurement site being established by Detroit's traditional Big Three automakers. In the second, Sears, Roebuck and Co. (NYSE: S) and Carrefour Supermarche SA , two of the world's biggest retailers, will work with Oracle to create the first business-to-business online exchange for that industry.
Indeed, Oracle is now aggressively touting its database and management programs as the foundation that it hopes will some day undergird most consumer and business-to-business e-business. The automotive and retail networks are only the latest in a series of so-called Internet marketplaces -- or online exchanges that help streamline and cut costs in companies' supply-chain management process -- that Oracle has been helping set up over the past year.
"Oracle is in a unique position to drive our economy into the 21st century," said analyst Bob Austrian at BancofAmerica Securities. "That sounds grandiose but I think it's true."
But the Redwood Shores, Calif.-based company has had to play catch-up. International Business Machines Corp. (NYSE: IBM) was among the first high-technology companies to start touting electronic business. In fact, many credit Big Blue with coining the term "e-business."
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Monday's announcement by Sears and France's Carrefour comes on the heels of news on Friday that General Motors Corp. (NYSE: GM), Ford Motor Co. (NYSE: F) and DaimlerChrysler AG (NYSE: DCX) were linking in a supply network. In banding together, the car makers abandoned a brief but intense competition to form rival online procurement networks, pitting Oracle against rival Commerce One Inc. (NASDAQ: CMRC).
Detroit's Big Three automakers said the unified network would be open to all their suppliers -- who themselves spend a combined $500 billion annually -- in addition to other automakers and their respective suppliers, partners and dealers around the world. Both Oracle and Commerce One will serve as technology partners in the as-yet-unnamed network.
"The announcement hereby establishes a de facto industry standard which other auto industry participants ... will be free to join," wrote analyst David Garrity of Dresdner Kleinwort Benson in New York in a note to clients.
Oracle and Commerce One likely weren't elated with the integration of the two fledgling online exchanges, an analyst said, adding that they probably had no choice in the matter.
"The technology vendors may not have been eager to play in the same sandbox but the auto industry, like every industry, needs that to happen. Markets must be open enough to work with each other," Austrian said.
"Closed markets would be akin to needing a different credit card for every mall," he said.
Oracle's stock was up 3-3/4 to 72-3/8 Tuesday afternoon, with 16.7 million shares changing hands, making it the fifth most active stock on the Nasdaq.
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Analysts are looking for more such exchanges like the ones already announced and in which Oracle is taking a stake.
"We expect Oracle ... to announce six to eight additional agreements in the coming months to host even more ... exchanges," wrote Merrill Lynch analyst Christopher Shilakes in a note to clients.
But even so, don't expect Oracle's two other big competitors, IBM and Microsoft Corp (NASDAQ: MSFT). to stand by idly.
"I would expect companies like Microsoft and IBM to make their presence known in these markets in short order," said BancofAmerica Securities' Austrian.
Big Blue, for example, has been selling its wares -- both hardware and its DB2 database software program -- to companies that are setting up Web-based electronic exchanges, said Steve Mills, general manager for IBM's software solutions business in an interview. Charles Schwab Corp., for example, uses IBM's database software to help run its online trading site and many of the world's biggest airlines use it for their reservations systems.
It's also very early in the game, he said, adding that there are going to be a slew of these exchanges popping up in the next year.
"Our model is clearly oriented to wide-market participation and not trying to set up unique structures that end up in a competitive position to others," Mills said. "We're interested in being an enabler whereas Oracle is trying to create them and be a part-owner of them." |
