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12/14/2010
09:21 PM
Bob Evans
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Global CIO: Is Larry Ellison Hurting Oracle By Hammering Competitors?

Excellent industry analyst Josh Greenbaum says Ellison's recent words and deeds are doing damage to Oracle, but I believe the opposite is true.

"Okay—the former world champion, the [IBM] P7—the P7's a good product—what can I say? IBM has good products. And they've got an excellent chip, and the guys that our Sparc guys compare themselves to are the IBM Power PC guys." (Read all about it in Global CIO: Larry Ellison Vows To 'Go After' HP; Is Alliance Dead?.)

And a few months ago, in a column called Global CIO: Is Larry Ellison Going Soft On HP And IBM?, I reported that Ellison offered this measured analysis of IBM:

"IBM is a great company and I appreciate the kind words from Sam Palmisano about us as being their #1 competitor now and actually I mean that sincerely. I think Oracle is flattered, we have worked very hard. We look at IBM as our #1 competitor and we are thrilled that they look at us as their #1 competitor . . . .

"IBM's services business seems to be the dominant part of their business and the product business is important but secondary to the services business, if you will. We look at it just reverse. We look at our products being the dominant part of our business, and one of the things we are trying to do with our products is obviate the need for services."

This summer, IBM executive Steve Mills said Oracle uses "bait and switch"tactics with its customers, and went on to lambaste the reputation Oracle has in the market and the tactics he said Oracle uses to win customers. Is that vicious? Over the top? Or is it—as I believe—good, appropriate, and aggressive advocacy and competition?

3) What defines leadership?

As noted in #2 above, Josh wrote, "These are not some of Ellison's finest moments."

Does Ellison speak with more frankness and more bluntness that most CEOs? He sure does. Is that the only way to be successful? It sure isn't. But it is the way that Oracle and Ellison have been successful—hugely so. Strip out a bit of the histrionics and here's what Ellison is saying: about IBM, he's saying that Oracle's going to beat them in high-end systems through providing superior performance, and that Oracle's going to beat IBM in databases; about SAP, he's said that Oracle's technology is superior and that Oracle will use "superior industry-specific functionality" to beat SAP in applications (read all about it in Global CIO: Larry Ellison Declares War On IBM And SAP).

As for HP, Ellison has indeed blasted its board and new CEO Leo' Apotheker in unprecedented ways. But whereas Josh says Ellison did that in spite of HP being a longtime strategic partner, I think Ellison unloaded on HP's leadership precisely because it is (was?) a longtime strategic partner. Seeing HP remove a CEO of whom Ellison thought very highly (Mark Hurd) and replace that CEO with one of whom Ellison thought quite the opposite (Apotheker), Ellison did indeed lash out at perhaps Oracle's top hardware partner on the planet. But he also then went out and found replacements while also creating his own alternatives with new systems from Sun.

To my way of thinking, that's leadership and business savvy—and quite the antithesis of "not some of Ellison's finest moments."

4) Is Ellison turning allies into enemies?

Josh wrote, "Meanwhile, the consequence of Ellison’s attacks and actions regarding SAP, HP and IBM are having the unintended effect of pushing the above three competitors into a relatively united front against the Ironman from Redwood Shores."

I think it's fair to say that SAP has and will continue to regard Oracle as a primary and formidable competitor, even though the companies do some business together as arm's-length partners—so, no love lost there. As proof, check out this column:

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