To all ORCL longs,
Here is Ray Lane's response to Berst's ridiculous article.
TALKBACK TO JESSE BERST
Oracle president responds
Ray Lane, Oracle president and chief operating officer
EMAIL: JGLASS@US.ORACLE.COMMonday Aug 17, 1998Occupation: WORLD'S SECOND LARGEST SOFTWARE COMPANYLocation: REDWOOD SHORES, CA, USA
Opinion articles are one thing, but to build a case on data which flies in the face of facts is negligent and reprehensible.
I'll address the inaccuracies in the order they appeared.
YOU WROTE: 'Despite the occasional strong quarter, sales of Oracle's 'classic' relational database are leveling off.'
REALITY: For eight consecutive quarters, Oracle's core database business grew an average of 24 percent in local currency. In Fiscal Year 98, despite the Asia Pacific flu, Year 2000 and a sales force reorganization, the database business grew 15 percent in local currency. In the Americas, Oracle's core market, the database business grew a solid 20 percent this last fiscal year.
Oracle remains the market leader with 60 percent on UNIX and 42 percent on NT as compared to Microsoft's 39 percent, according to Dataquest's most recent findings.
With the widespread adoption of Oracle8, customers are purchasing database options now available. New business opportunities like data warehousing, e-commerce and the Web represent fast-growing areas for database deployments.
Finally, in the fast growing Internet Commerce arena, Oracle powers 69 percent of the 'best web sites' on the Internet today, according to a leading research company.
YOU WROTE: 'These days, Oracle actually makes more money from two other sources: services (consulting) and applications software...'
REALITY: Oracle makes its highest revenue percentage from the database business. What might have confused you is that Oracle reports its service revenue to include education, consulting, support and license upgrades. That means, for example, that all license upgrades from Oracle7 to Oracle8 are included in the services portion of our revenue number. Our database revenue number is purely market share database growth. The real services revenue (consulting and education) is less than 30 percent of Oracle's overall revenue. Support revenues constitute the remainder of the services number.
You imply that because Oracle's services business is growing, our database business is suffering. Not so. Our business is expanding overall, and the size of the customer base inherently will cause an increasing rate of services (e.g., support, maintenance) revenue. Thus, growing services merely reflect past growth in license sales, as it all continues to accumulate.
YOU WROTE: Oracle has an 'outmoded business model...vulnerable to a competitor who offers 80% of the functionality for half the price. A competitor like Microsoft, with its low-cost, high volume, commodity approach.'
REALITY: On price, Microsoft is not the low-cost leader. In a study published in June of last year from Business Research Group, Oracle was shown to have 54% lower cost of ownership than Microsoft. Cost of ownership includes the base software, future upgrades and service. The Oracle model presents a more realistic view of what an enterprise can expect to spend over the life cycle of the system.
Oracle's business model is to offer high value at a reasonable price. In the large enterprise market the need is for mission critical, highly scaleable, reliable technology. Oracle is in this market, Microsoft is not.
In the middle market, we're years ahead with Oracle8 and this is where Microsoft wants to compete. Here we offer more better technology and functionality at equal or better price.
Finally, in the appliance market we offer extremely low cost products specifically designed for this market, such as Oracle Lite for the Palm Pilot, which we recently announced and which has already received Canadian Computer Wholesaler Magazine's Innovation '98 Technical Excellence award.
We do not think this business model is outdated and more than 90% of the Fortune 500 agree; they all run on Oracle.
In the age of Internet computing, customers of all sizes want a partner that can deliver technology to send and receive large volumes of information, reliably and quickly over a network. This is Oracle's core competency. And while price is a factor, bottom line, customers ultimately want technology that works.
Take this recent example: 'While MSFT continues to trumpet the success of its NT operating system over UNIX based systems, the US Navy is having second thoughts about putting NT at the helm. A system failure on the USS Yorktown, last September temporarily paralyzed the cruiser, leaving it stalled in port for the remainder of a weekend.' (see wired.com
YOU WROTE: Oracle has 'poor partnering skills' and you reference a recent Wall Street Journal article which reported that, 'Microsoft is quickly recruiting an army of partners, many of them Oracle loyalists.'
REALITY: Microsoft's partnering strategy is very simple. They have money to burn and spend it freely on cash incentives to get partners to adopt an inferior, possibly adequate, product. We support our partners, we give them value and technology innovation, and the support we can afford to provide without having a cash cow on the desktop.
For the definitive view of Oracle versus Microsoft's partnering, check out either the June 15 issue of Computer Reseller News (CRN) or the August 3 issue of VAR Business. CRN compared Oracle to Microsoft on a list of critical partnering skills. Oracle took the lead overall and, importantly, 'Oracle gained its largest margin of victory in the technical support area, where it beat Microsoft 5.4 to 4.7....Oracle also came out comfortably ahead in product quality and reliability, with a 6.1 to Microsoft's 5.6.'
In the August 3 issue of VAR Business (page 55), 127 surveyed VARs rank Oracle #1 and Microsoft last.
The Wall Street Journal Article you reference goes on to say that after a weekend of sightseeing and trips to winery a number of consulting partners did sign with Microsoft, however 'many will continue to do business with Oracle as well.' Additionally, the article gives a specific example of a customer who switched to SQL Server and then back again to Oracle8 and confirmed that, 'After trying unsuccessfully to manage our workload with SQL Server, we finally switched to Oracle8 and the performance gains have been phenomenal.'
YOU WROTE: Oracle has the 'I Hate Bill Disease' and that 'executives with this disease do things to hurt Microsoft instead of helping their constituency.'
REALITY: Oracle is the world's second largest software and services company, Microsoft is the first, and a comparison is only obvious. This isn't about Larry versus Bill, although many times the media finds it more compelling to cover it that way. It's about an alternative world view.
Oracle's view is synonymous with the Internet computing model itself. According to most industry analysts Oracle8 has a multi-year technology lead against Microsoft's SQL server in allowing companies to build and deploy Internet applications today.
Oracle was the catalyst that got the industry to challenge Microsoft's desktop-centric computing model by introducing a server-centric, Internet-based model. Today, IBM and Sun, both Oracle constituents, ship thin Internet appliances. Even Microsoft, responding to the ground swell of support for the thin client model, acquired WebTV.
YOU WROTE: Oracle has 'a flawed vision...(including) a failed network computing initiative', and that this takes us outside our core competency.
REALITY: Oracle and yes, specifically Larry Ellison, rocked the foundation of the industry with the notion of network-based computing to bring about lower cost, easier to use computing. The Internet fueled the growth of Larry's idea. This is not outside our core competency. It IS our core competency.
Oracle's 20 year track record of innovation has brought about fundamental change in the way technology is used to address critical business needs. From delivery of the first commercial relational database to advancing the network revolution, Oracle has historically taken measured risk to fuel the company's growth and bring the best technology to market in the swiftest possible time. |
