For instance, Ellison likes pairing the name Bill Gates with the phrase "convicted monopolist" whenever possible. More recently, Ellison made a point of referring to German software rival SAP as "sap" rather than reciting each letter, as the company prefers.
But Ellison's attack on SAP goes far deeper than words, as Oracle's recent acquisitions show. First, Oracle launched a full assault on joint rival PeopleSoft, which ended in a US$10 billion hostile takeover of the company and one of the largest mergers ever in the software industry. Oracle quickly followed that up by arm wrestling SAP for ownership of Retek, paying more than US$600 million for the company--about twice its market value before the bids started rolling in.
Oracle's buying spree is uncharacteristic and an about-face for Ellison, who once declared that the sure sign of a struggling software company is that it starts writing checks instead of software. The strategy is also aimed squarely at SAP, which Oracle has long sought to overtake in the market for enterprise applications software, programs that help companies organize accounting, staffing, sales and logistical tasks.
After years of faltering in that US$47 billion market, Oracle is charting a bold new course, analysts said. But it's risky, too. Big software acquisitions are rarely blazing successes.
If Ellison can pull it off, the strategy has the potential to not only reshape his company but the entire industry, one analyst said. Specifically, it could legitimize mergers in a culture that tends to shun all things "not invented here," or "NIH" in Silicon Valley parlance.
"It's important for Oracle and how the financial community looks at Oracle and how prospective (software) buyers look at Oracle," said AMR Research analyst Jim Shepherd. "It's also important for the industry, which is asking, 'Is Larry right? Is this the way the industry is going to develop in the future?'"
Shopping spree
Oracle is bulking up via acquisitions to battle rival SAP. Some recent buys:
Company: Oblix
Date: March 28
Price: Not announced
Company: Retek
Date: March 22
Price: About US$650 million
Company: PeopleSoft
Date: Dec. 2004
Price: About US$10 billion
Company: SiteWorks Solutions
Date: Jan. 2004
Price: Not announced
Source: Company reports
Of course, Oracle is no Baan. It's one of the most profitable and respected companies in software, with enormous resources and a globally recognized brand.
Oracle is also buoyed by its highly successful database management software business, which continues to grow at a double-digit clip despite inroads by IBM and Microsoft. It's still Oracle's money engine, accounting for about three-quarters of overall revenue. So even if the applications effort fizzles, Oracle won't be in immediate peril, analysts said.
Play video
There are currently no comments for this post.