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The World According To Larry

After showing up a few minutes late and leaving his global sales execs to weather more questions from the hungry analysts, Ellison strode onto stage with little fanfare and delivered his message of the moment--a very convincing argument as to why grid computing makes sense in a corporate computing era where so much valuable information has spread into the darkest corners of the network, unlikely to be unearthed any time soon except in bits and pieces. To make his point, he turned a cliche on its head, saying "it's very hard to find out about the forest when all you have are these trees and leaves."

At that point, he launched into the main event: the Q & A. The first question was predictable: What did he make of all these software earnings disasters of the past couple of weeks? Not one to bring attention to himself, Ellison sheepishly responded, "I told you so." And away he went. "The idea that we need all these different software companies is truly bizarre. All these other industries can consolidate, but oh, not the software industry." The worst part for Ellison is that so many software companies keep barely surviving. "These companies don't die. They become zombie companies like CommerceOne--now I'll probably get sued by CommerceOne."

Of course, even as he's decrying the farce of an industry with hundreds of unnecessary companies, he's also licking his chops like a kid who's walked into a toy store on the day of a going-out-business clearance sale. "A large number of companies in Silicon Valley will vanish. I think we'll have an opportunity to buy lots of companies that are right next to us, some of them run by former Oracle people."

But why, one analyst asks, will software industry consolidation work now when it's failed in the past? Of course, the question being asked is rarely the one Ellison answers, and in this case it appears he heard the question this way: Why does jumping into the consolidation game make sense for Oracle?

"Why do we fear Microsoft?" Ellison asks. "Microsoft sells a lot of software, and if you sell a lot of software, you can sell it very cheaply." And gobbling up some strategic losers with valuable technology could very well help Ellison achieve what may be his greatest business dream: out-Microsofting Microsoft. "We'd become bigger, we could spend more on engineering, and we'd be able to charge lower prices. That's how Microsoft did it, and that's what we need to do to compete with those guys."

Later the questioning shifts to Oracle's appetite for customers in the mid-market, a thirst that's being addressed with products such as its Standard Edition One, a low-cost database offering for small and medium-sized companies. Ellison bristles at the possible perception that Oracle has its eyes on the likes of coffee shops and hot-dog stands. The mid-market, he says, means different things to different people. And his eyes at this moment are definitely on the upper end of the mid-market, if it can even be called that. "Is it under $5 billion? Under $10 billion? If you get a majority of those, you have a much better business than focusing on customizing your applications for the high end."

As usual, he's making complete sense, which is part of what makes Ellison so maddening. His eccentric intensity is eclipsed only by his startlingly clear and self-assured view of the software landscape.

After a quick take on Oracle's financial state ("We don't see any weaking in our business"), a brief explanation of why it can--but won't--handle more than one large acquisition attempt ("We'd rather prove to you that we can handle one large acquisition smoothly and make it accretive"), and the customary reference to his sailing activities ("Every time I'm in a life threatening situation, our stock price goes up in anticipation of [chairman] Jeff [Henley] taking over"), Ellison finally hears the question that sets him up for a zinger.

"A few months ago, Microsoft and Sun buried the hatchet..." one analysts starts, but before he can finish his thought about Oracle's chief rivals ironing out a billion-dollar settlement, Ellison is well into his best riff of the day. "No, no, no...Microsoft purchased the hatchet. We'd love to sell hatchets. Y'know what it is? It's a wartime truce lubricated by cash." Ellison then scoffs at the notion Microsoft and Sun pushed when they publicly settled their differences: that they were simply doing what customers wanted. "They should have said this is good for America and the rest of the world. They missed that part. C'mon guys, you really think they have an alliance there?"

At this point, even the most jaded members of the audience surely feel they could just as well be at open-mike night as at a serious business gathering.

From that point on, Ellison has little opportunity to display his trademark wit, but he does get an opportunity to shoot down a question forcefully, an art he's perfected. When an analyst tries to ask a question about Oracle's inferior applications margins, Ellison will hear none of it. He says Oracle's apps margins match up against anyone's, expect perhaps SAP's. Oh, and also that little company to the north. The one he's openly obsessed with.

"If you ask me who our No. 1 competitor is, over the next five years, or 10 years--who I think about, who I worry about, who I'm constantly reading about--it's Microsoft. And they're an applications company." But as he says this, it's clear that his references to fear, worry and obsession notwithstanding, he loves having a rival he can't seem to beat. After all, I'm thinking, if he ever does get the best of Bill Gates, then what?

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