With PeopleSoft vanquished, Oracle CEO Larry Ellison is setting his sights on the industry's leading business applications vendor, SAP. But he also warned that Oracle customers might be facing higher prices thanks to the market clout of the combined PeopleSoft/Oracle company.
As SAP announced financial results showing booming growth in its US business, Ellison told a gathering of financial analysts that Oracle welcomes increased competition with SAP and believes that in any technology shootout its middleware stack will stomp SAP's flat. "We'd love to get in a technology battle with SAP," Ellison said. although he warned that it would't be a fair fight.
But there was some bad news for Oracle customers. Oracle's US$10.3 billion acquisition of PeopleSoft gave it significant added bulk in the applications market. Ellison said that bulk - may translate to fewer discounts for customers. "The nice thing about being bigger is we can be more aggressive on pricing," Ellison said. "On the other hand, we're not going to be foolish about this thing."
Oracle is a top competitor in the database market by most analysts' calculations, but it trails SAP in applications and BEA Systems in the application server market. Ellison said Oracle will look at both organic growth and acquisitions in those areas to give it the scale to capture the market lead.
Ellison painted Oracle as a company offering customers a more complete portfolio of top-quality enterprise applications than can either of its main rivals, IBM and SAP. While IBM competes heavily with Oracle in the database and middleware markets, the company doesn't sell applications, relying instead on a network of partners to fill that need. Meanwhile, applications leader SAP (which has no significant database technology) has been building out its NetWeaver integration platform. Potshots at SAP were sprinkled throughout Ellison's presentation.
"As we get into the stack wars, I think we're going to have a much firmer base to build our applications than they will," Ellison said.
In discussing Oracle's plans for continuing PeopleSoft's operations and appeasing the company's customers, Ellison reiterated much of what was said last week at a launch event for the newly combined organisation. At that event, Oracle executives discussed their work toward a merged applications suite, dubbed Fusion, due in the next several years.
"We think the PeopleSoft-J.D. Edwards merger did not do a very good job of capturing the J.D. Edwards channel. They lost up to half of their indirect distributors in the year or so they had been merged," Ellison said. "We're in the process of reassembling that team of people."
He also emphasised Oracle's commitment to holding on to PeopleSoft's customers. "We know we have to work very, very hard. We know we have to gain their trust," Ellison said in response to an analyst's question about Oracle's poor reputation among PeopleSoft users. "We think we can win them over."